California’s gas tax kicks in: How much more will drivers pay at the pump?

The cost for a gallon of gasoline in California is going up but whether it s increasing just a little bit or an awful lot is a hot-button political topic One price bump is definitive and it went into effect Tuesday Related Articles California regulator wants to pause Gov Newsom s refinery profit cap Supreme Court lets fuel companies sue over California s tough emission standards Will California s high gas prices go even higher Letters Walters deserves readers thanks for his perspective Prices in Bay Area rise at slowest pace in five years as inflation cools July marked the start of the new fiscal year and the state s gasoline excise tax ticked up from cents to cents an increase of cents per gallon As per Senate Bill which the Legislature in Sacramento passed and then-Gov Jerry Brown signed into law in the excise tax on motor bus fuels gets adjusted each year for inflation Formally called the Road Repair and Accountability Act the SB gas tax expects to raise billion over years More than billion per year will go to the Road Maintenance and Rehabilitation Plan that includes million for bridges and culverts million for local entities and million for bicycle and pedestrian projects Since the gasoline excise tax has gone up cents California has the highest excise tax on gasoline in the country Pennsylvania comes in second charging cents per gallon Other factors that may lead to higher gasoline prices are less clearly known Updating a state regulation The California Air Materials Board or CARB of late approved an update to the state s Low Carbon Fuel Standard Created in the standard called the LCFS has established a credit-trading activity that makes transportation fuels such as gasoline diesel and aviation jet fuel become less polluting over time Fuel producers that don t meet the requirements must buy credits from those who do thus providing companies an incentive to develop cleaner fuel options CARB says more than billion gallons of petroleum have been displaced by low-carbon fuels including billion gallons in alone as part of the state s efforts to transition from gasoline-powered cars to electric vehicles But strengthening the standard affects the credit prices in the LCFS which then influences fuel prices After months of back-and-forth with CARB the state s Office of Administrative Law in recent days gave the green light to implement the amended Low Carbon Fuel Standard effective July What will it mean for gas prices That s up for debate In September CARB staff circulated a -page assessment of the impacts of passing stricter requirements It included a table that projected a likely increase in the price of gasoline of cents per gallon in and cents for diesel and cents for fossil jet fuel CARB executives later backtracked saying the figures were not explicit predictions of where gas prices would go and asserted the LCFS historically accounts for just to cents of what consumers pay per gallon Last autumn circumstances economist Danny Cullenward wrote a paper for the Kleinman Center for Ability Initiative at the University of Pennsylvania that commented if LCFS credit prices reach their maximum allowed levels then retail gas prices impacts could be cents per gallon in the near term cents per gallon by and nearly per gallon by But in the next paragraph Cullenward noted LCFS credit prices are fundamentally uncertain and could easily be lower In an interview this week with the Union-Tribune Cullenward commented current credit prices have indeed dropped to the point where I don t expect there to be a difference in cost that s at all visible to drivers next month But at the same time Cullenward expects that will change We re facing headwinds on electric vehicles and the LCFS carbon intensity targets on paper are going to ratchet up fast he commented So I think the likely for substantial retail price impacts is really quite essential in the years ahead In a separate analysis Colin Murphy of the Low Carbon Fuel Plan Research Initiative at UC Davis estimates the updated LCFS will effect in a net addition of to cents per gallon to the price California drivers Nobody s got a good model for precisely predicting credit prices Murphy commented So I took my judgment based on having primarily worked on the LCFS for about years now and created a range of likely credit prices to make his estimation But Murphy has a more optimistic view in the long run Since the charges the LCFS places on high-emission fuels like gasoline make low-emission fuels like renewable diesel and electric cars cheaper Murphy mentioned the net cost of drivers in the long run is zero apart from administrative costs which are a tiny fraction of total revenue flowing through the scheme Refinery shutdowns loom Last fall Phillips reported it will shut down its twin Southern California refinery facilities in Carson and Wilmington by the end of this year In April of this year Valero declared it plans to close its refinery in the Northern California city of Benicia in The CEO of the San Antonio-based company disclosed California has been pursuing policies to move away from fossil fuels for the past years and the consequence of that is the regulatory and enforcement conditions is the largest part stringent and laborious of anywhere else in North America A jogger runs in front of the Phillips refinery in the Los Angeles area The company plans to close down the refinery by the end of this year AP The two refineries account for roughly of the state s crude oil maximum leading fuel analysts to raise concerns that the closures will squeeze supplies of the specially blended gasoline that is sold to California drivers Gov Gavin Newsom who accused oil companies of ripping off customers when gas prices spiked in and appeared to take a much more conciliatory approach to industry after the refinery announcements Newsom sent a letter to California Vigor Commission directing the agency to redouble the state s efforts to work closely with refiners to help ensure Californians have access to transportation fuels such as gasoline in the short and long term Potency commission vice chair Siva Gunda responded last week with a host of recommendations Among them Suspending a provision in a recently-passed state law that could slap financial penalties on oil companies if the commission deemed they made excess profits at the pump The -page letter included calls to cut red tape to boost in-state oil production and streamlining efforts to enhance imports of crude from foreign countries The problems laid out in this letter are complex but solvable Gunda wrote but the tone was sobering Gasoline imports statewide could increase to - of demand by the summer of and up to in the northern California region after the Valero and Phillips closures bringing peril of supply disruptions and price volatility Gunda joined by CARB chair Liane Randolph and California Natural Support Agency secretary Wade Crowfoot had a briefing with reporters the day the letter to Newsom was sent The gist is we get it we understand concerns that Californians have about gas prices Crowfoot declared On the one hand our state residents have made it very clear that they want us to transition to clean our potency and transportation but on the other hand we need to maintain affordability A spokesperson for Newsom communicated Associated Press the governor will review the recommendations and advance solutions that maintain a safe affordable and reliable supply of transportation fuels for California War of words In the meantime politicians are firing verbal shots at each other Republicans say Newsom and policies backed by Democrats who have a supermajority in Sacramento have slashed oil production in the Golden State and made gas too expensive Senate Republicans introduced a bill to repeal the LCFS update After it did not get out of committee Senate Minority Leader Brian Jones R-Santee tried to force a floor vote but Democrats voted no Jones has since called for an independent audit of the Air Support Board for what he called a secretive overhaul of the LCFS alluding to the promising -cent increase mentioned in Cullenward s paper if credit prices reach their maximum allowed levels With these new state-imposed costs fuel prices are expected to spike unpredictably throughout the summer and the foreseeable future Jones noted in a news release Tuesday People need to prepare Newsom s office has countered blasting what it called a swirl of misinformation and disingenuous alleges about California gas prices set to soar Trump s tariffs and policies impacting the price of crude oil stands to swing gas prices far more than any state guidelines the release reported Murphy of UC Davis mentioned there s just no evidence to suggest that the LCFS credit price is going to rise in any real considerable fashion much less anywhere near the price ceiling where you start getting those -cent per gallon impact At least for now California gas prices have remained steady despite hostilities between Israel and oil-rich Iran and strikes by the U S military on Iran s nuclear facilities on June The average price for regular in the San Diego area has dropped cents a gallon in past three weeks according to AAA Fuel analysts say latest boosts in gasoline supply to California from Asia and other factors have thus far kept costs under control But California gas prices remain the highest the country The average price for regular in the Golden State stood at a gallon on Tuesday which is higher than the national average