Gas prices in California are the highest in the nation, and the state recently announced its policies are about to drive them even higher.
A recent Los Angeles Times editorial completely misrepresented the root causes and attempted to cast blame in the wrong place. This is the same tactic the governor and Legislature have been using to try to displace the blame, but the facts speak for themselves. For example, it is a FACT that many factors impact California’s gas prices, but policy choices made by the governor, Legislature, and state regulators have made California’s gas and diesel prices the highest in the nation.
As of March 11, 2024, state and local governments collected $1.24/gallon in taxes and fees—27 percent of the total cost of a gallon of gas goes to state and local agencies and another 18 cents above this goes to federal taxes. These aren’t industry talking points; these are FACTS provided by the California Energy Commission tracked and monitored over the past 20-plus years. The California government collects a 58-cent state excise tax, 12 cent per gallon low carbon fuel standard cost, 54 cents for cap and trade and other environmental fees, 10 cents for state and local sales tax, and a 2-cent state underground storage fee.
How do the governor and editorial writers at the Times justify this? Especially because gasoline taxes are one of the most regressive taxes in the state and are directly responsible for our high cost of living and high inflation rate. To offset this fact, the governor and Legislature argue that the money goes to pay for environmental programs.
While that may have been the Legislature and regulators’ original intent, these environmental fees are unrestricted profits to the state and can be used for whatever purpose the governor and Legislature wish, regardless of their connection to the environment. This year, the governor plans to take the profit he’s made off of all California drivers’ gasoline and diesel purchases to backfill the state’s general fund budget.
We all agree we must address climate change, but we must balance ambition with reality, especially cost. According to a recent report for the Center for Jobs and the Economy California’s aggressive climate laws and regulations have done no better and, in some years, worse than the rest of the nation, but they are increasing the price of electricity, fuels and natural gas. Other states have produced actual emissions reductions by pursuing alternative and generally less costly approaches.
Meanwhile, regulators and the governor are doubling down on their expensive policies that are driving up the cost of living. According to the Energy Commission, currently, our unique gas adds 15 cents to every gallon sold in California. In just a few months, CARB expects that cost could increase by another 47 cents per gallon. Eventually, this program could increase by a total of $1.83/gallon—and both are CARB estimates in constant 2021 dollars that do not account for inflation–on top of the other environmental fees and taxes that are already the highest in the nation.
At a time when Californians are paying more for electricity, housing, food, and other necessities they cannot afford a 50-cent increase per gallon, let alone nearly two dollars more.
The bottom line is that California’s policy choices are driving the high cost at the pump, and they’re continuing to do so. It might be easier to play the blame game, but the facts are the facts—the state of California makes a lot more money off a gallon of gas than oil companies do.
These facts aren’t refuted by regulators (in fact, they’re the ones who publish them), or even politicians.
But deflecting blame won’t lower costs, won’t bring down inflation, won’t make it easier for working families to thrive in California. We need realistic policy solutions, not scapegoats, and trying to deflect blame won’t lead to meaningful solutions anytime soon.
Robert Lapsley is president of the California Business Roundtable.
