California’s gasoline prices have long run significantly above the national average, and with state gas averaging over $6 a gallon while the national number hovered under $4, the gap has become a political and economic issue that Governor Gavin Newsom is trying to address — though critics argue his proposed approach would make things worse rather than better.
California’s premium over national gasoline prices is structural rather than incidental. The state requires a unique fuel blend that can only be produced at a limited number of refineries, creating a supply situation where any refinery disruption quickly translates into price spikes. The state also carries some of the highest fuel taxes in the country, multiple regulatory compliance costs, and cap-and-trade carbon pricing requirements that all stack onto the base wholesale price.
Newsom’s proposals have included a windfall profits tax on oil companies, which he argues would reduce the gap between refinery costs and retail pump prices by disincentivizing price gouging. The oil industry and many economists counter that an additional tax on refinery profits would reduce investment in California’s already-constrained refinery capacity, potentially worsening supply and driving prices higher over time.
The underlying tension is that California’s fuel policies — the special blend, the carbon pricing, the regulatory requirements — are deliberate choices made by the state, many justified on environmental grounds. Those choices structurally add to fuel costs. A governor who champions those same policies then positioning himself as the person fighting high gas prices is a political posture that’s easier to maintain than to reconcile analytically.
For California drivers, the practical consequence is straightforward: gasoline is expensive and likely to remain so regardless of which political figure claims credit or blame. The state’s 2035 combustion ban is partly premised on making the high-cost ICE option increasingly uncompetitive — and at $6+ a gallon, that argument is at least partially self-executing.