April Showers Bring Higher Gas Prices

The old adage is April showers bring May flowers.  Well, after a very wet winter, it looks like spring has finally sprung in California.  As soon as the seasons change, Golden State drivers are typically hit with another unwelcome phenomenon brought on by spring – rising gas prices.  This year is no exception.

AAA reports that the average per gallon cost of gasoline as of Friday, April 12 was $3.95 per gallon.  Compare this with the national average of $2.81 per gallon.  This represents a jump of 63 cents per gallon over the average price of $3.32 cents per gallon last month.

So, why are gas prices suddenly so high in California?  We put that question last summer to our friend Nick Loris from the Heritage Foundation on PRI’s “Next Round” podcast.  Nick studies and writes extensively on energy and environmental issues.

“It really boils down to supply and demand.  It’s fundamental economics,” he said.  “Summer driving season is upon us, so more people are getting in their vehicles and using more fuel.  Across the country and across the world, because oil is a globally traded economy, when you have a stronger economy like we’ve had, you’re seeing upward pressure on prices.”

But why are Golden State drivers paying so much more to drive than those in other states?

To be sure, there are issues of reduced production adding to the supply issue – AAA notes that oil refineries in Wilmington and Carson recently suffered breakdowns, while other refineries across the West Coast are suffering from planned and unplanned maintenance.

Loris points the finger at Sacramento politicians, starting with high gas taxes.

Californians now pay 72.76 cents per gallon in total state and federal gas taxes – the second-highest in the nation behind Pennsylvania.  This is about 20 cents higher per gallon than the national average of 52.18 cents per gallon.  The problem has been made worse by the enactment of Senate Bill 1, the $52 billion gas tax increase proposal.  Gas taxes increased by 12 cents per gallon in November 2017, and will go up another 5.6 cents per gallon on July 1.

Prices are also higher thanks to misguided government policies that are increasing energy burdens on Californians.  “There’s a number of state policies that are adding pain at the pump for folks in California,” said Loris.  “If you look at AB 32, the cap-and-trade program, that’s estimated to add over 10 cents per gallon to the price of gasoline.  The low carbon fuel standard also increases costs of refining gasoline and selling gasoline in California.”

Indeed, the California Energy Commission estimates that the Low Carbon Fuel Standard accounts for about 16 cents per gallon and cap-and-trade accounts for about 12.5 cents per gallon – or 28.5 cents per gallon combined.

Last year, voters supported keeping the $52 billion tax increase in place at a time when gas prices were falling for the winter months.  But now facing $4 per gallon gas prices, it will be interesting to see if voters are having any buyers’ remorse.  Will we see any pressure from angry constituents toward elected officials who are the main culprits for rising gas prices – or have we all been lulled into accepting high gas prices as just a part of life of living in the Golden State?

Tim Anaya is the Pacific Research Institute’s communications director.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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