News Summary

Starting July 1, California drivers will face a gas price increase due to new taxes and regulations. The state’s excise tax will rise by 1.6 cents per gallon, with projections estimating prices nearing $6 per gallon. The newly implemented Low Carbon Fuel Standard could add up to 65 cents per gallon, potentially costing drivers an extra $600 to $1,000 annually. Rising geopolitical tensions and refinery closures also contribute to this trend. Legislation is underway to cap fuel credit prices amidst critiques of the LCFS program’s economic impact.

California drivers will see a notable increase in gas prices beginning July 1 due to newly implemented taxes and regulations. The state’s excise tax is set to rise by 1.6 cents per gallon, which, combined with other newly introduced measures, is expected to bring prices close to $6 per gallon for consumers.

The newly approved Low Carbon Fuel Standard (LCFS) program, finalized by the state’s air resources board in November, is projected to have a significant impact on gas costs. According to estimates, this program could add as much as 65 cents per gallon to the price at the pump. In light of these developments, the Automobile Club of Southern California suggests that the combined effect of the gas tax increase and the Low Carbon Fuel Standard could result in an additional annual cost of between $600 to $1,000 for California drivers.

Further complicating the pricing landscape are rising tensions in the Middle East and the closure of two refineries, both of which could exert additional upward pressure on gas prices in the state. State Senate Minority Leader Brian Jones has indicated that, assuming the current trend continues, gas prices could hit $8 per gallon by the close of 2026.

In response to the anticipated price hikes, an online petition spearheaded by Jones, advocating for the repeal of the LCFS program, has accrued more than 25,000 signatures. On the other hand, Governor Gavin Newsom’s administration has attempted to mitigate concerns by releasing a fact-check memo that disputes widely reported expectations regarding price increases. The governor’s office asserts that the increase attributable to the new taxes and regulations will be limited to between 5 and 8 cents per gallon.

The Revised Low Carbon Fuel Standard

The revision to the Low Carbon Fuel Standard aims to decrease greenhouse gas emissions and imposes stricter regulations on fuel producers. The prior fuel standard was responsible for approximately 9 cents per gallon in costs, while the updated version is estimated to add only 5 to 8 cents per gallon. Nonetheless, proponents argue that the potential economic burden of the program, labeled as “price gouging” by critics including Jones, warrants further scrutiny and review.

Legislative Response

In light of rising gas prices, new legislation introduced by Democratic lawmakers seeks to cap fuel credit prices to mitigate the risk of sudden spikes at the fuel pump. Yet critiques continue to arise, particularly regarding the accuracy of emission reduction estimates tied to the LCFS, especially with regards to biofuels.

Current Gasoline Prices

As of now, gasoline prices in California lead the nation, averaging $4.484 per gallon. A preliminary survey conducted in San Diego on June 30 revealed a wide range of prices among various gas stations, with figures ranging from $3.99 to $5.39 per gallon.

Conclusion

These impending changes to California’s fuel regulations highlight the complexities of balancing environmental goals and economic implications for consumers, as drivers brace for potential increases in their gasoline bills. With a combination of tax increases, new program provisions, and external geopolitical factors, the cost of fuel may continue to be a pressing issue for residents as they navigate their day-to-day transportation costs.