Gavin Newsom’s green agenda and global oil turmoil risk sending California’s gas prices above a wallet-crushing $8 a gallon — potentially returning drivers to the desperate fuel rationing not seen since the 1970s, state lawmakers and industry experts warned.
With drivers in the Golden State already facing the highest gas prices in the US, Southern California state Sen. Suzette Valladares has urged the governor to scrap California’s cap-and-invest program that charges oil makers for carbon emissions. She dubbed Newsom’s program the “cap-and-tax” scheme, and warned that closing any further oil refineries in the state could trigger economic collapse.
“It’s not scaremongering at all,” Valladares told The California Post of a report from the USC Marshall School of Business that found gas prices could reach $8 a gallon by the end of 2026.
“Because of cap and invest, we’re looking at $1 more a gallon for gas. We are one refinery away from losing another 10% of California’s supply. When you have less supply, the gas price goes up,” she explained, adding that a gallon of could go for well above $8.
Valladares’ Southern California colleague, Republican state Sen. Tony Strickland, has proposed a bill that he believes would lower prices by over $1 dollar a gallon by eliminating state taxes, cap-and-trade investments and the state’s low-carbon fuel standard.
He called on Newsom to convene a special session to address gas prices.
California premium
Californians pay an average of $4.81 per gallon for gas, compared to the national average of around $3.
That “California premium” includes roughly $0.28 in higher state excise tax costs, $0.13 in higher sales tax and local fees, and $0.75 for climate programs that are unique to the Golden State.
California also requires a special and more costly fuel blend—designed to prevent smog—that only the state’s refineries and specific Asian countries can produce.
It adds an extra $0.15 per gallon cost for California drivers compared to the average US driver.
“There are six different taxes or fees on each gallon. By contrast, the federal tax is eighteen cents,” Tim Stewart, president of the US Oil and Gas Association, told The California Post. “So California’s taxes and fees are 10 times those of the federal government’s tax.”
In worse news for drivers, the California Air Resources Board (CARB) recently approved amendments to the cap-and-invest program, placing a strict limit on greenhouse emissions that decreases every year.
Gas giant Chevron warned Tuesday that CARB’s plan could add another $1.21 a gallon to California gas prices.
Last month, Strickland proposed a Senate to remove the states-specific green taxes that he says would lower the price of unleaded gas by $1.08 a gallon.
“Governor Newsom has the power to lower gas prices, and he should use it,” Strickland told The California Post. “I’ve introduced legislation to suspend the state gas tax, and the Governor should join me in supporting immediate relief for California families and small businesses.”
Back to the future
In the 1970s, California experienced two major gas shortages: one driven by the 1973 Arab OPEC oil embargo following the Yom Kippur War, and one caused by the disruption of Iran’s Islamic Revolution in 1979.
During the latter crisis, the state introduced rationing: vehicles with odd-numbered license plates could buy gas only on odd days, and those with even-numbered plates could buy gas only on even days.
Long lines and fights at gas stations, along with riots over price hikes, were common. Amid the recent turmoil in Iran, Vallardes fears a return to the 1970s.
“We’re looking at having to wait in lines as they did in the ’70s because we simply will not have the supply if we’re importing nearly 70% of our demand. We have a choice between a soft landing or a hard landing that collapses our economy,” she said in remarks echoed by Strickland.
“With rising tensions in the Middle East threatening global oil supplies and new proposed amendments from the California Air Resources Board that could drive prices higher, we are creating a perfect storm for even higher costs at the pump,” Strickland said. “Californians need relief now, not policies that make the problem worse.”
Mean and green
Newsom’s policies are designed to meet California’s ambitious climate goals, including a commitment to achieving net-zero greenhouse gas emissions by 2045.
But critics say the costs have been pushed onto working-class Californians and the state’s besieged small businesses.
Opponents say the shutdown of state oil refineries has dwindled supply and decreased the state’s energy sustainability, as California now imports over 60% of its crude from foreign markets.
“In California, we’ve enacted policies that restrict production and refinery capacity in the state,” Valladares said.
“Policy after policy over the last two decades has brought us to this point where we now pay the highest gas prices in the nation—nearly 50% more than every other state,” she added, saying the costs get “passed on to my constituents at the pump every time they fill up.
More refineries shutting down in the near future “would be a crushing blow to working-class families,” Stewart said.
“All of this could have been avoided. And it is now getting to the point where lousy energy policy in California is starting to impact other states like Nevada and Arizona,” he added.
Representatives for Gov. Newsom did not respond immediately to requests for comment.