California gas crisis risks sending prices above $8 a gallon and forcing drivers to ration fuel: lawmakers
California’s gas prices could soar above $8 a gallon, potentially triggering shortages not seen since the 1970s, state lawmakers and industry experts warn. Rising costs are being driven by Governor Gavin Newsom’s environmental policies and global oil market turmoil.
Southern California state Sen. Suzette Valladares urged the governor to end California’s cap-and-invest program, which charges oil producers for carbon emissions. She called the program a “cap-and-tax” scheme and warned that further refinery closures could devastate the state’s economy.
“It’s not scaremongering,” Valladares said, referencing a report from the USC Marshall School of Business projecting gas could reach $8 per gallon by the end of 2026. “We’re one refinery away from losing 10% of California’s supply. Less supply means higher prices.”
Her colleague, Republican state Sen. Tony Strickland, proposed legislation to cut gas prices by over $1 per gallon by eliminating state taxes, cap-and-trade fees, and the low-carbon fuel standard. He urged Governor Newsom to call a special session to address rising fuel costs.
California Premium
California drivers currently pay an average of $4.81 per gallon, compared to the national average of roughly $3. The extra costs, often called the “California premium,” come from higher state excise taxes, sales taxes, fees for climate programs, and a specialized smog-reducing fuel blend produced mostly by in-state refineries.
Tim Stewart, president of the US Oil and Gas Association, noted that California’s combined taxes and fees are roughly 10 times the federal gas tax. Meanwhile, the California Air Resources Board (CARB) recently tightened greenhouse gas limits under the cap-and-invest program, which Chevron warned could add $1.21 per gallon to costs.
Strickland argued that removing state-specific green taxes could lower unleaded gas by $1.08 per gallon. “Governor Newsom has the power to lower gas prices, and he should use it,” Strickland said.
A Return to 1970s Shortages?
In the 1970s, California faced major gas shortages caused by the 1973 OPEC oil embargo and the 1979 Iran Revolution, leading to rationing and long lines at pumps. Valladares warned that current global tensions could trigger a similar scenario if supply falls further.
“With over 60% of our crude imported, we could be forced to wait in lines like the ’70s,” she said. Strickland added that recent policies combined with international instability are creating a “perfect storm” for higher gas prices.
Environmental Goals vs. Economic Costs
Newsom’s policies aim to reach net-zero greenhouse gas emissions by 2045. Critics argue that costs have disproportionately affected working-class Californians and small businesses. Refinery closures have reduced local supply, forcing the state to rely heavily on foreign oil.
“Policy after policy over two decades has led to the highest gas prices in the nation—nearly 50% higher than other states,” Valladares said. Stewart added that further refinery shutdowns would be a “crushing blow” to families and could impact neighboring states.
Representatives for Governor Newsom did not respond immediately to requests for comment.
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