California drivers are facing significantly higher gasoline prices, with the statewide average reaching $4.589 per gallon as of Monday morning – nearly $1.67 more than the national average of $2.929, according to data from the American Automobile Association (AAA).
The surge in prices represents an increase of approximately 40 cents per gallon over the past month, a rate four times faster than the national average, which rose by less than 10 cents during the same period. The average price a month earlier was $4.205.
Several factors contribute to California’s consistently higher gas prices, including the state’s stringent environmental regulations, taxes and fees, and limited refinery capacity. California’s unique gasoline blend, designed to reduce pollution, as well adds to production costs. As of March 2025, California drivers pay the highest taxes at the pump in the country, totaling $0.90 per gallon, broken down as $0.18 federal, $0.60 state excise, $0.10 state sales tax, and $0.02 for an underground storage tank fee.
According to an analysis of a $4.59 per gallon price, approximately $0.54 is attributed to compliance with environmental programs, $0.32 to distribution and marketing, $0.98 to refining, and $1.84 to the cost of crude oil.
The impending closure of Valero’s Benicia Refinery, serving Northern California, is expected to exacerbate the situation. The 145,000-barrel-per-day refinery is slated to cease operations in April. Governor Gavin Newsom has stated that Valero will continue importing gasoline into Northern California even after fully exiting the market.
However, some observers attribute the rising prices to California’s regulatory environment. Critics point to the state’s cap-and-trade programs, blending requirements, lack of inbound pipelines, and the Jones Act as contributing factors. David Tangipa, a Republican member of the California Assembly, stated that the closure of the Benicia Refinery is a direct result of policy decisions by the state’s Democratic leadership, and warned that California has lost nearly 20 percent of its refining capacity in the last six months.
Nationally, gas prices are also on the rise, though at a slower pace. The national average has increased by 4.9 cents over the past month, reaching $2.84 per gallon as of Monday, according to GasBuddy data. Patrick De Haan, head of petroleum analysis at GasBuddy, noted that upward momentum could accelerate as refinery maintenance intensifies and the transition to summer gasoline begins. He also highlighted the potential impact of OPEC+ production decisions and geopolitical tensions, particularly between the U.S. And Iran, on price volatility.
California alone refines more than 90 percent of the gasoline it consumes, according to the California Energy Commission, making it vulnerable to disruptions from refinery maintenance or closures. When local refineries cannot meet demand, the state is forced to import gasoline from other countries, often at a higher cost. Recent reports indicate increasing gasoline imports from the Bahamas.
