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Why California Gas Prices Are Dropping and What This Means for the Future

Updated: Jan 20, 2023

Contrary to previous trends, California’s gas prices have dropped 29% since the nation’s record high of $6.43 in June. The reason for this decline is the premature shift to cheaper winter-blend gasoline. However, to understand the gravity of these changes, it is crucial to account for the roots of California’s incomparably high fuel prices.

A decade prior, the cost of California gas more closely resembled that across the nation. However, after implementing a cap-and-trade program in 2013, prices surged. In this case, by establishing a capacity–which can be extended through individual purchase–for the amount of carbon produced, oil refineries have subsequently increased the price of their gas to maintain profits. Furthermore, the promotion of biofuels–alongside raising the gas excise tax by 12 cents per gallon in 2017–further provoked refineries to raise prices. In other words, the continuous adoption of progressive legislation has cost Californians significantly.

Although some may argue that the supposed environmental benefits of such legislation serve greater importance than the convenience of lower prices, it is important to consider that carbon emissions–produced by transport vehicles–have not decreased, but rather increased, since 2013.

Moreover, Patrick De Haan, the head of Petroleum Analysis at Gas Buddy, ascribes these trends to the increasing limitation of refined oil supply. Propelling this point, by calling for price gouging legislation prohibiting excessive profits, California Governor Gavin Newsom has prompted the further relocation and decommissioning of oil refineries. In other words, gas prices have increased by limiting the supply of such a high-demand product.

On the other hand, U.S. President Joe Biden attributes the nation’s rising gas prices to Russia’s war on Ukraine. Upon denouncing the endeavors of Russian President Vladimir Putin, Biden remarks, “I banned the Russian import of oil here, in America… it was the right thing to do”.

Furthermore, Biden proposes the mainstream use of electric vehicles to foster financial relief in an environmentally conscious manner. Specifically, in a speech on March 31, 2022, Biden projects that through using such vehicles, “a typical driver will save about $80 a month from not having to pay gas at the pump”. However, accounting that the average Californian spends $167.77 on gas monthly, 29 years of such purchases–granted if current prices remained constant–would be required to amass a cost to that of the average electric vehicle (worth approximately $60,000). Additionally, it is worth noting that Biden–who drives a 1967 Corvette–fails to comply with such advice he has publicly issued.

Nevertheless, upon Newsome’s request, the California Air Resources Board had approved the premature switch to winter-blend fuel, allowing the sale of cheaper gasoline in early October. To elaborate, this shift typically occurs in November due to the blend’s inclusion of butane which produces decreased emissions under colder temperatures. However, by advocating for this process a month prior, Newsom unintentionally raises questions regarding the necessity of its existence. Specifically, as different areas within California experience varying weather patterns, temperature changes encompass varying intensities. For example, while Northern California temperatures range from 39°F to 94°F, Southern California experiences a milder climate, including temperatures varying from 48°F to 85°F. Most notably, San Diego experiences extremely limited temperature differentiation, including a low of 48°F and a high of 77°F. Thus, implementing the use of multiple fuel blends depending upon an area’s climate may serve a greater significance in the effort to reduce not only California gas prices, but rather those throughout the nation with minimal negative environmental implications.

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