California Gas Prices
Are Californians paying too much for the price of gas?
The answer is a resounding Yes!
Californians have been paying a much higher price per gallon then their neighboring states for so long that they forgot to question why. Just take a glance at the 12-month Average Retail Price Chart FYI 2016 and compare what Californian’s pay compared to the rest of the US. Going back three decades and you’ll find a similar trend in that Californian’s pay much more for a gallon of gas then the other 45 states in the US.
Why are Californians paying such high gas prices
compared to other states and is that fair?
At first glance, you might think that gas prices are driven purely as a function of the proximity of oil wells or refinery locations perhaps not having refineries is the cause for higher gas prices. After all, if oil has to be shipped long distances to a refinery and then the gas has to be shipped to distribution centers, then transportation will add to cost to the price of gas.
None of this is true and data throughout the US 50 States support the fact that neither the number of oil wells or refineries in any particular state drives the price per gallon. Some states have NO oil wells or refineries and have a lower price per gallon of gas compared to neighboring states.
For instance North Carolina has no crude oil reserves or production and yet their price per gallon average is $2.30/gal versus California average of 3.00/gal – What $.70 cheaper/gal on any given day?
In fact California ranks third in the nation in crude oil production, excluding federal offshore areas, and California accounts for more than one-tenth of the total U.S. capacity. To meet strict federal and state environmental regulations, California refineries are configured to produce cleaner fuels, and they often operate at or near maximum capacity because of the high demand in the rest of the states for these petroleum products.
TAXES California Imposes on the Oil Companies is partly to blame!
THE ARM: California relies on severance tax to raise money from oil companies and charges oil companies four major types of taxes:
- Production taxes levied on the value of the oil extracted from the ground
- Corporate Income taxes levied on the net income of corporations
- Property taxes applicable to oil properties, which may be based on the assessed value of future expected production from oil reserves in the ground
- Sales Taxes on purchases of both inputs and equipment needed for capital improvements.
THE LEG: Officials in the State of California will tell you that adding to the price differential is the state’s cap-and-trade program, which was designed to reduce greenhouse gases. The program has raised production costs by around 12 cents a gallon in California. “There are certain regulation standards that increase the cost of production as well. While this may be true this extra added cost to the production of some special blend gasoline is not needed and produces no real significant reduction in greenhouses gasses. Emission standards on cars have for years been very high and are getting the job done without the need for blended fuel. In short Californian’s are getting duped.
BOTH: Blame it on FEDERAL & STATE TAXES! Californians pay around 59.02 cents a gallon in gasoline taxes. Of that amount, 18.4 cents is a federal excise tax, 30 cents is a state excise tax, 10.62 cents is other state taxes and fees for California special blend gas. It is true that gasoline taxes in California go to transportation projects, maintenance and construction.
BUT HOW MUCH IS TOO MUCH TAXES?
“According to the U.S. Energy Information Administration, over 80 percent of the cost of a gallon of gas immediately leaves the local economy!”
“In the study by the U.S. Energy Information Administration most communities are not significant producers of oil and gas for personal transportation, which means that when local residents spend money at the gas pump, much of that wealth exits the local economy. Savings on gas can add up to significant benefits to regional economies. Not all of the savings will be spent locally, but even a fraction of what is spent annually on personal transportation has the potential to bolster job growth and build wealth within local economies.
“A study by the California Electric Transportation Coalition found that EACH DOLLAR SAVED from gas spending and spent on other household goods and services generates 16 jobs in the state.”
“Excerpt above from a report by the International Economic Development Council Creating the Clean Energy Economy Analysis of the Electric Vehicle Industry.
Saving YOU the consumer $0.24 per gallon - We must have the vision and insight to see it!Remove the blended gas requirement saving the individual California consumer 10.62 cents per gallon, add a tax saving of 13.38 cents by giving the Oil Companies an incentive to lower their cost will result in a $4.6 billion annual saving for the California consumer. This $4.6 billion dollar savings then gets pumped back into local communities with a $5 to $6 return in goods and services. It’s a win/win for the California consumer, the oil companies, and local California communities!
Unless something is done about this the price of gas in California may continue to simply increase without anyone having to answer for it. I plan to do something about it as governor. Get rid of the blended gas requirement, give the oil companies an incentive, and reduce Federal Excise Tax just slightly and Californian’s will pay $0.24 cents less per a gallon of gas!
As governor of California I plan to take a strong look at the gasoline prices and taxes Californians are forced to pay for the gas they put in their vehicles.