Although Californians have always paid the steepest gas prices in the U.S., the fallout from Russia’s invasion of Ukraine has some Golden State drivers paying more than $6 per gallon for regular unleaded fuel in recent weeks.
But a slight decline in the state’s average gas price, from $5.919 to $5.910 Wednesday, could spell promising news in the weeks ahead.
Southern California, which has been hardest hit by the spike in prices, could see a drop of between 35 to 75 cents per gallon in the next few weeks, Patrick De Haan, head of petroleum analysis at GasBuddy, wrote on Twitter.
“My advice to those in San Diego, Los Angeles and in general SoCal — do not be in a rush to fill up. Prices will be coming down,” he wrote.
SoCal to see sizable relief in #gasprices: wholesale prices again plummeting today. With the overall decline in oil price and the extra drop as refinery issues have been addressed, LA could eventually see a decline of 35-75c/gal in the coming weeks.
— Patrick De Haan ⛽️📊 (@GasBuddyGuy) March 29, 2022
Meanwhile, the national average dipped one cent to $4.23 Wednesday — about the same price as a week ago, according to AAA. After reaching a peak of $4.33 per gallon Mar. 11, the national average started dropping in recent weeks before stabilizing. The decline in gas prices has slowed as the cost of a barrel of crude oil remains near $110.
“The global oil market reflects the volatility caused by the war in Ukraine grinding onward,” AAA spokesperson Andrew Gross said in a Monday news release. “And with oil prices refusing to fall, the price at the pump is likewise meeting resistance at dropping further.”
Californians pay the highest fuel prices in the country, partially due to higher taxes for infrastructure and environmental regulations. A cleaner, more expensive mix of gas is also required in California compared to the rest of the country due to the state’s high emission standards, and refineries outside of the state aren’t necessarily producing the fuel on a regular basis. The higher cost of living in California could also be contributing to the higher prices.
The seasonal switch-over to the more-expensive summer blend of gasoline in California, usually accompanied by a price hike to cover the cost of producing that blend, could also mean higher prices approaching the warmer weather months.
In San Francisco, the average stayed at about $5.94 a gallon, while average prices in Oakland went down a penny to about $5.86. Prices across the Bay Area appeared to have stabilized, remaining at $5.85 in San Jose and $5.86 in the Santa Cruz/Watsonville area.
Gov. Gavin Newsom unveiled a proposal last week to provide some financial relief to drivers. Under his proposal, registered vehicle owners would be eligible for $400 in payments for each vehicle they own, capped at two vehicles – for a total cost of $9 billion from the state’s estimated $20.6 billion budget surplus. There isn’t an income limit to the program, which also includes electric vehicle owners, but excludes people without cars.
Newsom’s proposal follows one by a group of Democratic and independent lawmakers who advocate a one-time $400 rebate to all taxpayers, also at a cost of $9 billion. Republican state legislators previously called for a suspension of the state’s 51-cent a gallon gas tax.
There’s also a mystery “surcharge” in California, pointed out by UC Berkeley Professor Severin Borenstein, who researches gas prices. Borenstein said that after an Exxon Mobil refinery explosion in 2015, an unexplained premium has been going into the pockets of gasoline sellers. The surcharge reached 92 cents Tuesday, likely due to disruptions at refineries, according to Borenstein.
The surcharge “could be due to a constraint in the supply chain or a regulatory issue,” he wrote on Twitter. “Or could be exploitation of market power in CA’s concentrated refining/distribution network. I’m just arguing that we should figure out what it is.”
The Mystery Gasoline Surcharge averaged $0.31 over the entire year of 2021, amounting to about $4 Billion in total for 2021. It averaged about $0.02 from 2000 through 2014 and never averaged more than $0.13 in any one year during that time.
— Severin Borenstein (@BorensteinS) March 29, 2022