Katerina Swanson
California has some of the highest fuel prices in the US, with retail prices for regular-grade gasoline consistently higher than in any other state. In April 2025, the state's average price per gallon was $4.85, $1.69 higher than the national average. Fuel prices in California are expected to increase further due to changes in the state's Low Carbon Fuel Standard (LCFS) regulations and the impending closure of two major refineries by the end of 2026. These factors could lead to a significant spike in fuel prices, with some projections estimating prices could reach $8.43 per gallon.
| Characteristics | Values |
|---|---|
| Average price per gallon in California | $4.85 |
| Average price per gallon in the US | $3.16 |
| California's price per gallon compared to the US average | $1.69 higher |
| Predicted price per gallon after the closure of one refinery | $6.43 |
| Predicted price per gallon after the closure of two refineries | $8.43 |
| University of Pennsylvania report projection for price increase by 2030 | 85 cents |
| Senate Minority Leader Brian Jones' Change.org petition signature target | 50,000 |
| Senate Minority Leader Brian Jones' Change.org petition current signatures | 29,000 |
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What You'll Learn
California's fuel prices are the highest in the US
California's fuel prices have been a cause for concern for residents, with the state already facing the highest gas prices in the country. The University of Pennsylvania report projected that changes to the state's Low Carbon Fuel Standard (LCFS) could further raise gas prices by 65 cents per gallon in the near term and 85 cents by 2030. This has sparked debate and petitions, with Senate Minority Leader Brian Jones urging lawmakers to repeal the price hike as unaffordable for Californians.
The state's fuel prices are expected to increase even further due to the upcoming closure of two major refineries: Phillips 66 in Los Angeles and Valero in Benicia. With the number of gasoline producers in California decreasing from nine to seven, analysis by University of Southern California Professor Michael Mische indicates that gas prices could soar to $8.43 per gallon.
While the California Air Resources Board (CARB) disputed the projected 65-cent increase, claiming it to be misinformation, they acknowledged that prices may rise by 5 to 8 cents. They attributed any potential increase to oil companies passing on compliance costs. Governor Newsom's office supported this sentiment, emphasizing that the LCFS could lead to a 42% reduction in fuel costs per mile by 2045.
The combination of LCFS changes and refinery closures could result in a significant rise in fuel prices for Californians, making it even more expensive to fuel their vehicles.
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The state's fuel prices are set to increase
California already has some of the highest fuel prices in the US, and they are set to increase further. In April 2025, the state's average price per gallon was $4.85, a massive $1.69 higher than the national average.
There are a number of factors contributing to this impending rise in fuel costs. Firstly, changes to California's Low Carbon Fuel Standard (LCFS) regulations could cause prices to increase by up to 85 cents by 2030, according to a University of Pennsylvania report. The California Air Resources Board (CARB) disputed this figure, claiming the increase would be much lower at 5 to 8 cents, but nevertheless, any rise in costs will impact drivers.
Additionally, two major refineries in the state, Phillips 66 in Los Angeles and Valero in Benicia, have announced their closure by the end of 2026. This will reduce the number of gasoline producers in California from nine to seven, which is predicted to cause a sharp spike in fuel prices. University of Southern California Professor Michael Mische estimates that gas could reach $6.43 per gallon after the first closure and soar to $8.43 once both refineries cease operations, with the potential for even higher prices under volatile market conditions.
These factors combined could lead to a significant increase in fuel prices in California, placing a greater financial burden on residents and businesses alike. It remains to be seen whether any efforts to mitigate these rising costs will be implemented effectively.
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This is due to refinery closures
California drivers already pay the highest gas prices in the US, at around $4.85 per gallon, compared to the national average of $3.16. Refinery closures in the state are expected to cause further price spikes.
Phillips 66 has announced that it will shut down its Los Angeles refinery in 2025, and its Wilmington plant has already ceased operations. Together with the closure of Valero's Benicia site, California will lose nearly 300,000 barrels-per-day of refining capacity, or roughly 20% of the state's total. This will result in a more significant reliance on imported fuel, increasing shipping costs and emissions from tanker vessels.
There are multiple factors contributing to higher retail gasoline prices in California, including higher crude oil costs and refining costs on the West Coast. Refinery crack spreads, calculated by subtracting regional refiner acquisition costs for crude oil from wholesale gasoline prices, are typically higher on the West Coast due to tighter supply-and-demand balances. California refiners must also comply with the state's Cap-and-Trade program, which requires them to bid for emissions allowances, and the LCFS, which mandates the purchase of carbon credits based on the volume of carbon-emitting fuels supplied to the market.
The refinery closures will have a significant impact on local communities, with the potential for job losses and economic suffering in areas reliant on incomes related to refinery work. However, there may also be positive outcomes, such as cleaner local air and a boost to clean-energy infrastructure and jobs.
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Changes to California's Low Carbon Fuel Standard (LCFS)
California's Low Carbon Fuel Standard (LCFS) program is a key component of the state's climate change mitigation strategy. The LCFS aims to reduce the carbon intensity of transportation fuels sold, supplied, or offered for sale in California through 2030. The California Air Resources Board regulates the program, setting carbon intensity requirements that fuel producers and importers must meet.
The LCFS applies to a range of fuels, including natural gas, electricity, hydrogen, gasoline mixed with at least 10% corn-derived ethanol, biomass-based diesel, and propane. Fuel producers and importers regulated under the LCFS must comply with quarterly and annual reporting requirements. To meet the carbon intensity standards, bulk fuel sellers can either reduce emissions within their supply chains or purchase credits from companies selling lower-carbon fuels. These credits are based on lifecycle carbon intensity calculations overseen by the state climate regulator.
The LCFS has had a significant impact on the market for diesel fuels, with biofuels accounting for more than half of statewide consumption since 2023. The program has also mobilized substantial financial flows through private transactions. However, there are debates around the accuracy of the LCFS program's carbon intensity scores, particularly regarding the land-use impacts of crop-based biofuels.
As of June 27, 2025, amended carbon intensity benchmarks were announced, which will apply to fuel transactions occurring on and after July 1, 2025. California policymakers continue to evaluate the state's strategy for reducing transportation emissions, including the role of biofuel subsidies and the potential impact on retail gasoline prices in the future.
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Gas prices in California have spiked above $6 twice in two years
California has witnessed a surge in gas prices, with the state's average cost per gallon exceeding $4.85 in April 2025, reflecting a $1.69 increase compared to the national average. This issue has sparked concerns among Californians, especially given that gas prices have spiked above $6 per gallon twice in the past two years. The recent developments highlight the challenges faced by California in managing fuel costs, which have significant implications for residents' finances and the state's economy.
The projected closure of two major gasoline refineries in California, Phillips 66 in Los Angeles by the end of 2025 and Valero in Benicia by April 2026, is expected to significantly impact fuel prices. University of Southern California Professor Michael Mische's analysis suggests that gas prices could reach $6.43 per gallon after the first closure and climb even higher, to $8.43, once both refineries cease operations. These closures could have a ripple effect on the state's economy, affecting jobs and local businesses.
The potential consequences of these refinery closures have prompted Senate Minority Leader Brian Jones to urge lawmakers to reconsider policies that could contribute to higher gas prices. Jones argued that the closures would not only impact consumers but also threaten jobs and local economies. He emphasized the risk of a destabilized fuel supply and increased dependence on out-of-state and foreign oil, underscoring the urgency of finding solutions. In response to these concerns, Governor Newsom has directed the state to enhance collaboration with refiners to ensure a stable and affordable gasoline supply.
Amid the debate over refinery closures, it's important to note that California's gas prices are influenced by various factors, including state policies, fuel efficiency improvements, and market conditions. Despite claims of misinformation regarding price increases, the reality is that California drivers rank 45th in gasoline consumption nationwide and 21st in spending on gasoline per capita. The state's gas prices are consistently higher than in other states, often exceeding the national average. As a result, price hikes can have a significant impact on California's cost of living and strain families and the broader economy.
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Frequently asked questions
California has some of the highest fuel prices in the US. In April, the state's average price per gallon was $4.85, $1.69 higher than the national average.
The high prices can be attributed to California's Low Carbon Fuel Standard (LCFS) regulations. A University of Pennsylvania report projected that these regulations could raise gas prices by 65 cents per gallon in the near term.
To meet the targets set by the LCFS, companies will need to blend in more expensive clean fuels or buy emissions credits, which will likely be passed on to drivers.
Yes. The closure of two major refineries in the state by the end of 2026 could cause a sharp spike in fuel prices. University of Southern California Professor Michael Mische projects that gas could hit $6.43 per gallon after the first closure and soar to $8.43 once both refineries are offline.
While the LCFS may lead to higher fuel prices, it is important to consider the potential environmental benefits. The California Air Resources Board (CARB) has stated that the LCFS could reduce fuel costs per mile by 42% by 2045.
