For two years, California Democrats have used claims of “price gouging” to justify price controls for oil companies and other radical environmentalist policies.
But while California’s $6/gallon gas prices are the most expensive in the country, price gouging has nothing to do with it.
A new report by CBS News California Investigates revealed a variety of factors are causing high prices, including global supply difficulties, refinery closures, and state policies. It found that the state’s high fuel prices are caused by a number of laws imposed by Democrats to protect the environment — not gouging by the oil companies themselves.
Notably, California requires fuel stations sell a special gas blend intended to reduce emissions, which is more expensive to produce. The blend also means the state is an “energy island” that can’t simply import cheaper fuel from other states. The special blend adds about 10 to 15 cents per gallon of gas.
Other factors include a 61-cent state excise tax per gallon; 23 cents per gallon from the state’s cap-and-invest program, which was created to reduce greenhouse gas emissions; and 14 cents per gallon from the state’s Low Carbon Fuel Standard.
Not on the list of oil refinery price gouging, which California Democrats have blamed for skyrocketing prices for years. In 2024, the California state legislature convened a special session during which it capped oil company profits. Two years later — and after the closure of two refineries that supplied almost 20% of California’s refining capabilities — state officials finally admitted there was no evidence of price gouging.
Now, California is outsourcing some of its oil refining to Asian countries, CBS News California Investigates reported. Relying on those countries can increase gas prices, since oil must be shipped across the Pacific, sometimes taking weeks to reach the state. Delays in transit can spike prices in the event of global shortages or refinery outages.
Even though global conflicts are exacerbating prices, the outlet found California’s gas prices were already higher than the national average, with 55% of the cost of each gallon coming from state-specific costs.
Another factor is a “mystery surcharge” that appeared in 2015 after the closure of a major refinery, but refinery operating costs were already higher in California before that surcharge, UC Berkeley economist Severin Borenstein told CBS News California Investigates.
After the state legislature found no evidence of price gouging, state officials said they found some causes of price increases.
“We’ve identified certain dynamics that were creating those price spikes,” California’s National Resources Secretary Wade Crowfoot told CBS News California Investigates.
Crowfoot said the state is trying to balance both affordability and climate goals, according to the outlet. He said he was not “in a position to point a finger” when asked if there was evidence of price gouging.
Last year, the California energy commission voted to pause its ability to set price caps on oil company profits for the next five years.
Manager of the Chevron Richmond refinery Tolly Graves told CBS News California Investigates that price caps ignore the volatility of the industry.
“Those good months are the only way we make a profit … if you cap the good months but don’t support the bad ones, it creates an unviable business,” Graves said.
The Chevron refinery produces gas for 20% of cars in Northern California and 60% of jet fuel from Sacramento to San Jose, according to the outlet.
Higher labor, energy, and regulatory costs all contribute to higher gas prices, Graves told the outlet. The state’s gasoline blend also requires specialized production that cost billions of dollars in investment.
“It costs us hundreds of millions a year just to stay in business,” Graves said. “Things have to change for us to be willing to invest in a refinery in California.”
California Governor Gavin Newsom’s office did not respond to The Daily Wire’s request for comment.
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