California Gas Prices Are Rising Again Thanks to Another Gas Tax Increase – Pacific Research Institute

California Gas Prices Are Rising Again Thanks to Another Gas Tax Increase

Californians who are struggling to make ends meet during these tough economic times are going to be in for sticker shock come July 1:  gas prices will rise yet again.

What’s behind the increase, you ask?  It’s not due to rising demand as people begin to slowly return to normalcy following the COVID-19 stay-at-home orders.  Nor is it due to a refinery shutdown in California or some Middle East oil dispute.

Gas prices are rising in California thanks to state government imposing yet another gas tax increase.

Under state law, the California Department of Tax and Fee Administration is “required to adjust the motor vehicle fuel and diesel fuel excise tax rates on July 1, 2020, and every July 1 thereafter, by the percentage change in the California Consumer Price Index, as calculated by the Department of Finance.”

Starting July 1, California drivers will be paying 50.5 cents per gallon for the gasoline excise tax, up from 47.3 cents per gallon presently.  For those who drive a diesel car, the excise tax will jump to 38.5 cents per gallon, up from the current 36 cents.  According to the Los Angeles Times, this is the third gas tax increase in the last four years.

When you factor in other state taxes and fees and the federal excise tax of 18.4 cents per gallon, Californians will pay 82.2 cents per gallon in taxes every time they fill up starting July 1.  Diesel motorists will pay roughly $1.13 per gallon in government taxes.

According to the American Petroleum Institute, California drivers already paid the highest total gas taxes in the nation, ahead of second-place Pennsylvania at 77.1 cents per gallon.  This latest gas tax increase will only solidify a number 1 ranking that no one should be proud of.

But it doesn’t have to be this way.  As documented in the new Pacific Research Institute study “Legislating Energy Prosperity,” Californians could save big on their energy bills if lawmakers embraced free-market energy policies.  At the same time, the state would continue to make significant progress in lowering emissions.

Reforming or replacing unrealistic energy mandates that are driving up the price of gasoline in California could, over time, save drivers up to $9.6 billion annually based on gas prices in 2019 (a more normal driving scenario) or up to $11 billion based on the sharp drop in gas prices from April 2020.

This latest government gas tax increase comes at a time when millions of Californians are now out of work thanks to the COVID-19 economic downturn.  California’s most recent unemployment rate was 16.3 percent.  Roughly 2.4 million jobs were lost in the month of April.  More than 6.3 million unemployment claims were processed over a 14-week period this spring.

Californians are looking for relief from high costs of living, including high gas taxes.  Unfortunately, these pleas are falling on deaf ears among state policymakers who are doubling down on big government energy policies.  Big government energy mandates hurt working class and minority communities in California especially hard.  This gas tax increase is just the latest government-imposed hurdle that millions will have to overcome trying to provide for their families in these tough economic times.

Dr. Wayne Winegarden is senior fellow in business and economics at the Pacific Research Institute and author of the new study, “Legislating Energy Prosperity.”  Download a copy at


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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