(The Center Square) — California gas prices are nearly $2 per gallon higher than the national average due to state policies, according to a new study from the University of Southern California.
This new evidence contradicts state leaders’ insistence that “price-gouging” by local fuel producers and distributors is the reason for the state’s chronically high gas prices.
The paper from Michael A. Mische found that “Collectively, the sum of all federal, state, and local taxes and fees, as well as regulatory-mandated costs, total approximately $1.638 a gallon, as of March 10, 2025.”
“Not surprisingly, the average price of retail gasoline in California on March 11, 2025, was $4.694 a gallon, or 52.35% higher per gallon for all formulations than the national average price for gasoline at $3.081,” wrote Mische, confirming that state and local taxes make up for much of the difference between state and national gas prices.
“Based on 30 to 50 years of data, the primary conclusion from this study is that California’s high gasoline prices and supply dilemmas are, by design, engineering or serendipitously, largely self-inflicted, and the result of directed policies and a litany of regulations, taxes, fees, and costs,” concluded Mische. “The economic evidence is abundant; California refiners have not engaged in widespread price gouging, profiteering, price manipulation, ‘unexplained residual prices’ or surcharges, magical or otherwise.”
Last year, California Gov. Gavin Newsom called a special session of the state legislature to pass new regulations on refineries, citing price gouging. Phillips 66 then announced the closure of its Los Angeles facility, which accounts for 8.57% of the state’s remaining refining capacity. The closure will put further pressure on gas prices.
California gas prices also have an impact on the parts of Nevada and Arizona that rely on California gasoline, meaning the effects of the state’s policies extend beyond the state’s borders.
The Republican governor of Nevada and the Democratic governor of Arizona signed a bipartisan letter urging Newsom not to adopt the new refinery regulations, to no avail. Gas prices in Nevada and Arizona have since spiked due to California refinery closures, highlighting the governors’ concerns.
Last year, California also passed a $162 billion fuel tax to fund credits for “clean” fuels such as electric vehicle charging and hydrogen, with costs expected to be passed on to consumers of “dirty” fuels.
