(The Center Square) – California Gov. Gavin Newsom celebrated a gas price decline of 89 cents per gallon since 2022, when gas prices rose to an annual average of $5.75 per gallon with the onset of the conflict in Ukraine and sanctions on Russian energy.
Newsom said the state’s price gouging and transparency efforts helped bring prices down, but with California prices declining just four cents more than the national average, data suggests global energy prices drove most of the decline. California’s recent job losses may also have contributed to the state’s slightly larger decrease in gas prices.
“Californians are paying less to fill up at the pump, due in part to the state’s gas price gouging & transparency efforts,” said Newsom in a statement. “We’re protecting consumers at the pump with new transparency on the oil industry to hold Big Oil accountable.”
Under legislation signed into law by Newsom in 2023, refineries must now share their profit margins, and state regulators have the power to set a maximum profit margin.
However, comparisons between California and national gas prices suggest global commodity prices, not state legislation, have driven the state’s recent gas price declines.
According to the U.S. Energy Information Agency, California weekly gas prices for regular gas peaked at $6.27 per gallon in June 2022, and are now $4.09 per gallon. At the same time of California’s peak in 2022, national gasoline averaged $5.36 per gallon, and now average $3.22 per gallon.
This means California gas prices are down $2.18 from their peak, while national gas prices are down $2.14 from California’s peak — a difference of four cents per gallon. At the time of California’s peak, in-state gas prices were 91 cents higher than the national average.
Experts say global gas prices are declining after resolving disruptions of the COVID-19 pandemic, and the start of the ongoing conflict between Ukraine and Russia, compounded by a relative slowdown in the American and Chinese economies.
Newly released federal data says California lost 156,300 jobs in the first six months of 2024, which may have accounted for much of the remaining four cent difference due to the impact of job losses on gasoline demand; a 2015 Obama administration report found commuting to and from work accounts for about a quarter of vehicle miles traveled, and connected the Great Recession’s unemployment decline with falling gasoline consumption.
Energy experts warn California’s gas price respite may come to an end when new carbon emissions and refinery regulations come into effect that could increase state gas prices by up to $1.15 per gallon in 2025.
“The projected increase could drive California’s retail prices as much as 62% higher than the national average in 2025,” wrote University of Southern California professor Michael Mische in a report. “To compensate for the increases, the average Californian driving an internal combustion vehicle will have to earn an additional $600.00 to $1,000.00 a year in pre-tax income in order to “breakeven” with 2024 prices, depending on the grade of gas they purchase.”