When gas is expensive around the country, it’s really expensive in California. Why does the Golden State always have the highest prices at the pump? It’s not just our taxes (though there are definitely some of those).
First off, geography is a big factor.
“The West Coast is kind of a ‘Petro Island,'” explained Patrick De Haan, head of petroleum analysis at GasBuddy. The Rocky Mountains cut off the West from the rest of the country, making it a tight and more secluded market.
“When there’s an issue on the West Coast, it can cause a price spike because there’s not a relief valve, so to speak,” De Haan said. “If a refinery in the Great Lakes goes down, gasoline can flow via pipeline from the Gulf Coast or the East Coast to the Midwest. California and the West Coast basically have no relief pipeline.”
That means if something goes wrong – even something relatively minor, like refinery maintenance taking a week longer than expected – prices on the West Coast will be hit immediately. Last year, for example, De Haan explained that refinery activity in the Pacific Northwest had to slow production amid a record heat wave. Even that disruption led to higher gas prices.
California also has a Cap-and-Trade Program, that requires big greenhouse gas emitters – like oil and gas refineries – to offset their emissions by purchasing carbon credits. “That’s obviously passed along to the end user, in this case, motorists,” said De Haan.
California’s Air Resources Board also requires gas stations in the state to only sell specific blends of gasoline formulated to minimize pollution. That blend is more expensive to produce, adding another cost that gets passed down to drivers.
There are also additional fees at the pump, like another carbon offset fee, which De Haan said is about 19 cents per gallon.
Then there are the taxes. California has a 51.1 cent tax on each gallon of gas. It’s a lot, but actually not the highest in the country. That honor goes to Pennsylvania with 58.7 cents per gallon.
“By the time we talk about all the taxes, the carbon management program – whether it be the carbon capture or the assessment on gasoline – it all adds up to a significant amount,” said De Haan. “Calfornia is in a league of its own because it has its own standards.”