Gavin Newsom’s Gas Price Premium

The average price a gallon this week hit $6.29 in California

WSJ editorial.

"Cash-strapped Americans have received relief from falling gas prices in recent weeks, but not Californians. The average gas price in the Golden State this week surged to $6.29 a gallon—$2.50 more than the national average—and the reasons are worth distilling since Gov. Gavin Newsom wants to export the state’s energy policies nationwide.

California gas prices have long been higher than the national average owing to hefty fuel taxes and climate regulations, but the difference now is the largest in at least two decades. Taxes add about 66 cents to the price of a gallon, about twice as much on average as other states. California’s cap-and-trade program and low-carbon fuel standard add roughly another 46 cents a gallon.

These climate regulations are causing refineries to shut down or convert to producing biofuels that are more profitable because of rich government subsidies. California lost 12% of refining capacity between 2017 and 2021 and is set to lose another 8% by the end of next year. Yet refineries outside of the state can’t produce its supposedly greener fuel blend.

So when California refineries experience problems, gasoline supply becomes tight and prices shoot up. A few refineries are experiencing scheduled maintenance after running all out over the summer, and a couple experienced unexpected problems. West Coast fuel inventories are the lowest in a decade and, irony alert, California refiners are reaping huge profits.

“If you’re a (refiner) on the Gulf Coast, your gross profit on gasoline is about $6.60 (per barrel of oil). If you’re in Los Angeles it’s about $101,” Tom Kloza of the Oil Price Information Service told the Mercury News. As much as progressives loathe Big Oil, their climate policies benefit large refiners and producers that can sustain the state’s steep regulatory costs.

Californians may be inured to high gas prices and not even realize how much more they pay than folks in other states. The average price of gas is $3.11 a gallon in Texas and $3.39 in Florida despite supply disruptions from Hurricane Ian. Many Californians think they’re living in the inevitable green future.

Mr. Newsom is making the rounds trying to raise his national profile of late, with a 2024 presidential run in mind. He’s boasting about his climate policies, though not about the high costs and shortages that go with them. He won’t get away with that if he goes national."