By Soumya Karlamangla and Erin Woo
It’s Wednesday. We’re talking about gas prices — why California’s are the highest in the nation, and what Gov. Gavin Newsom plans to do about it.
The price of gasoline in the United States reached a new high on Tuesday at $4.173 per gallon, surpassing the previous high set in July 2008.
But, as you probably know, fuel costs in California have been climbing for weeks and are significantly above the national average. On Tuesday, the average cost of a gallon in the Golden State was $5.444, the highest in the nation, according to AAA.
So why do we pay so much at the pump?
Gas prices have been rising for months nationally because of soaring demand following Covid-19 shutdowns. Costs began to climb even more once Russia invaded Ukraine, and will most likely keep growing after President Biden’s decision on Tuesday to ban Russian oil imports.
California is the only state where a gallon costs more than $5. In Los Angeles, San Luis Obispo, Napa and many other parts of the state, the average price of regular unleaded now exceeds $5.50.
“It’s hitting my pocket big time,” Boualem Dehmas said this week as he filled up at a Chevron station in San Francisco, where regular gas cost $5.69.
Dehmas, 52, is a self-employed limo driver supporting a wife and three children. How is he managing to survive the price increases? “God only knows,” he said.
California’s high fuel prices are partly because of taxes as well as regulatory programs aimed at reducing greenhouse gas emissions. Together, they added about $1.27 to the cost of a gallon of gas last month, according to a calculation by the Western States Petroleum Association. About 40 percent of that cost comes from the state’s gasoline tax. California taxes fuel at 51.1 cents per gallon, the second-highest amount in the nation after Pennsylvania, according to the Federation of Tax Administrators.
A planned increase to that tax is set to take effect in July to keep up with inflation. Gov. Gavin Newsom has proposed halting the spike, but Democratic leaders have been reluctant to agree.
In his State of the State address on Tuesday, Newsom also proposed a tax rebate to address rising gas prices. He said he was working with lawmakers on the plan “to put money back in the pockets of Californians.”
Kevin Slagle, a spokesman with the petroleum association, based in Sacramento, said gas prices also tended to be higher here because the state was a “fuel island.” California produces enough gasoline to meet 30 percent of its needs, and the rest is imported from Alaska or other countries, he said. There are no interstate pipelines carrying gasoline into the state.
That means that all imports must come by ship or truck, both of which are more costly. (If you’re wondering, California’s biggest foreign importers of crude oil are Ecuador, Saudi Arabia and Iraq, according to the California Energy Commission.)
In the Bay Area, one of the most expensive housing markets in the country, many lower-wage workers who commute long distances from more affordable areas are feeling the pinch.
Manuel Garcia drives 92 miles every day from Sacramento to San Francisco for his job at a construction company. The price of filling up his truck has increased to $140 from $80. “If my company didn’t pay for my gas, I’d look somewhere else for work,” Garcia, 62, told The New York Times.
Though the current prices are definitely high, they aren’t breaking records if you take into account inflation, writes Michael Hiltzik, a Los Angeles Times columnist.
In 2008, the last major run-up in gas prices, the cost of a gallon in California reached $4.588. If you translate that into today’s dollars, it would be $5.83, far higher than the current price at the pump.
Still, gas prices have an outsize impact on people’s perceptions of the economy, my colleagues reported. Fuel might account for only a small share of consumers’ overall spending, but the giant numbers posted alongside every highway in America hold plenty of sway.