California Gas Prices Dip Slightly After Retailers Permitted to Use Cheaper ‘Winter Blend’

Gas prices over $7.00 a gallon displayed at a Chevron gas station in Menlo Park, Calif., on May 25, 2022. Justin Sullivan/Getty Images

Californians are finding some relief at the gas pump this week after retailers transitioned early to a cheaper “winter blend,” but consumers are still paying the highest rates in the nation, according to the Automobile Club of Southern California.

Gas prices retreated to an average price of $6.20 Oct. 13 in the Golden State—22 cents lower than last week’s record high. The national average was $3.91 on Thursday, which was 4 cents higher than a week ago.

“[California’s] gas prices would have to come down by about $1.20 a gallon from last week’s records in most areas to completely erase the spike that began in September, and there is a possibility they could drop even more if wholesale gasoline prices continue downward,” Los Angeles-based Auto Club spokesperson Doug Shupe said in a statement on Thursday.

The average price of regular gasoline in the Los Angeles-Long Beach area was $6.26 per gallon, which is 23 cents lower than last week, 85 cents higher than last month, and $1.81 higher than last year, according to the auto club.

In Orange County, the average reached $6.15 a gallon, which was 29 cents less than last week but $1.75 a gallon more than last year. And, the average price was $6.20 in San Diego, which is 23 cents lower than last week, 83 cents higher than last month, and $1.80 higher than last year.

Despite the price drop, California consumers were still paying the highest prices in the nation to fill up. Alaska had the second-highest gas price average at $5.52, followed by Oregon recording a $5.46 average price. Georgia has the lowest price at $3.27.

California’s high fuel costs can be attributed to planned and unplanned maintenance at refineries in the state. Additionally, the state and federal government tacks $1.28 onto each gallon of gas for taxes and environmental policies.

For each gallon, California consumers pay the following:

• 54 cents for the state excise tax—the highest in the nation
• 18 cents in federal excise tax
• 23 cents for California’s cap-and-trade program to lower greenhouse gas emissions
• 18 cents for the state’s low-carbon fuel programs
• 2 cents for underground gas storage fees
• About 3.7 percent in state and local sales taxes

The Western States Petroleum Association told The Epoch Times the state’s policies become more restrictive every year, adding to fuel costs.

“Keep in mind, the first $1.28 per gallon we all pay at the pump today goes to taxes, fees and regulatory programs imposed by the state,” said Kara Green, spokeswoman for the petroleum association. “Our policy environment matters when it comes to energy costs, and … is getting more restrictive and costly every year.”

Windfall Tax Proposal

To temper skyrocketing fuel costs last week, Gov. Gavin Newsom asked the California Air Resources Board, a state regulatory agency, to allow retailers to transition early this year into using less-expensive winter-blend gasoline, saving as much as 25 cents per gallon.

Newsom, who blames oil companies for higher fuel prices, has asked the State Legislature to convene a special session to consider a “windfall profits tax.” The session is set for Dec. 5, when the Legislature is back in session for the 2023–24 legislative season.

Some industry experts warn that such a windfall tax could add more cost for consumers and destabilize oil businesses.

Valero, an oil company with a refinery in the state, responded to Newsom’s accusations, saying the state was the most costly location for refining.

“For Valero, California is the most expensive operating environment in the country and a very hostile regulatory environment for refining,” Valero’s Scott Folwarkow wrote to the California Energy Commission Oct. 3 after a request for answers to the high prices. “California policy makers have knowingly adopted policies with the expressed intent of eliminating the refinery sector.”

Several factors contributed to the challenging market, including requiring fuel blends not readily available in the state and aggressive environmental regulations. A windfall profits tax would only create higher fuel costs, he said.

“Adding further costs, in the form of new taxes or regulatory constraints, will only further strain the fuel market and adversely impact refiners and ultimately those costs will pass to California consumers,” Folwarkow wrote.

California lawmakers also weighed in on the governor’s proposal to increase taxes on oil companies.

“Only in California would someone propose to increase taxes as a solution to lowering gas prices,” Republican Assembly Leader James Gallagher (R-Yuba City) wrote on Twitter.

State Assemblywoman Jaqui Irwin (D-Camarillo) told The Epoch Times she welcomed the proposal and recent actions to combat the higher prices.

“As shared by Speaker [Anthony] Rendon, the Assembly has been diligently working to understand the market forces at play, and the Select Committee on Gasoline Supply and Pricing has been investigating long term solutions to address California’s high gas prices,” Irwin said in an email.

The select committee focused on gasoline pricing has met twice this year. Irwin, who is chairwoman of the committee, said the group was releasing a report in the next few weeks with recommendations, based on testimony from numerous stakeholders and industry experts including the California Energy Commission and the Legislative Analyst’s Office, for the Legislature to consider in the upcoming session.

“California’s near-term relief, the Middle Class Tax Refund, will soon put money directly into the pockets of Californians, which can help with the rising costs of gas and groceries,” Irwin said.