Why is gasoline so expensive in California?
California's $5.03 average gas price is the highest in the country. Roughly $0.68 per gallon comes from state and local fuel taxes, another $0.50 from California's cap-and-trade and Low Carbon Fuel Standard programs, and an additional $0.45 from a downstream market-structure premium that has persisted since 2015. The state has lost three refineries in five years and has no pipeline link to the rest of the country.
What you're paying for
California pays roughly $1.65 more per gallon than the U.S. average. Combined taxes (about $0.68/gal) plus carbon-program pass-through (about $0.50/gal) plus market-structure premium account for most of the gap.
Against its neighbors
Amber line marks the U.S. average of $3.38.
Price over time
California U.S. average
California, explained
Why does California have the highest gas prices in the country?−
Four overlapping factors. First, the country's highest combined state and local fuel taxes total about 68 cents per gallon. Second, cap-and-trade (covering transportation fuels since 2015) and the LCFS (in effect since 2011) together add an estimated 50 cents per gallon. Third, the state-only CARB Phase 3 reformulated gasoline blend adds about 10 cents per gallon in production cost. Fourth, California's downstream market structure — documented by UC Berkeley research as the 'Mystery Gasoline Surcharge' — adds another estimated 45 cents per gallon that has persisted since 2015.
How much of California's gas price is taxes?+
About 86 cents per gallon is direct fuel tax — 68 cents state and local, plus 18 cents federal. An additional 50 cents per gallon is the embedded cost of cap-and-trade allowances and LCFS credit obligations passed through to consumers.
Will Phillips 66's Los Angeles refinery closure raise gas prices further?+
The 2025 announced closure represents about 8 percent of California's refining capacity. Combined with the earlier Marathon Martinez conversion (2022–2023) and the Phillips 66 Rodeo conversion (early 2024), California has lost roughly 11 percent of its refining capacity in five years. Industry analysts and our model project an additional 15 to 30 cents per gallon of upward pressure once the LA closure takes effect.
What is the CARB reformulated gasoline blend?+
The California Air Resources Board sets a state-specific gasoline recipe (currently CARB Phase 3) with lower volatility, lower sulfur, lower benzene, and specific oxygenate handling. The production cost is about 10 cents per gallon higher than federal-grade gasoline, but the larger consequence is supply isolation: refineries in other states cannot easily sell their product into California unless they also meet CARB spec.
Why does Nevada also have high gas prices when it has no carbon program?+
Nevada and Arizona are both supplied primarily by California refineries and pipelines. When California's policies and supply costs raise the wholesale price in California, the effect propagates to neighboring states that depend on the same supply chain.