Foon Rhee

The Numbers Crunch: California’s pain at the pump comes with a premium

Lydia Holland fills up at a gas station in Sacramento last November. For several reasons, Californians pay the highest prices at the pump.
Lydia Holland fills up at a gas station in Sacramento last November. For several reasons, Californians pay the highest prices at the pump. Associated Press

Not that I want to date myself too much, but I’m old enough to remember when gas was less than a buck a gallon.

So when I fill up, I can’t help feeling a little hosed, especially knowing that California has now passed Alaska and Hawaii for the ranking no one wants – the nation’s highest prices at the pump.

In fact, according to a new calculation out this week, the price gap in May between the California and U.S. averages was a whopping $1.03, the biggest in at least 15 years. The cost “premium” ranged from 80 cents in the Sacramento region to $1.19 in Los Angeles.

California’s higher gas prices cost businesses and consumers roughly $1 billion total in May, the California Center for Jobs and the Economy estimates.

It’s a big chunk of our higher cost of living. Using federal data, the center estimates that the average California household spent $232 on gas last month. That’s $61 more than the average U.S. household and $78 more than the average household in the lowest-cost state, that darned Texas.

The difference has narrowed this month as prices have declined. Still, as of Friday, a gallon of self-serve regular unleaded cost an average of $3.55 in California, 77 cents more than the national average and still more than double the average gap between 2009 and 2014 of 35 cents.

So why the growing price gap?

Is it because California has higher gas taxes? Is it because of the cleaner-burning summer fuel blend that raises production costs? Is it because fuels came under the cap-and-trade system? Is it because California is an oil market unto itself?

It’s all of the above, according to the California Energy Commission. In a recent presentation to state legislators, it said:

▪ About 15 cents of the difference is because state gas taxes total 63.8 cents a gallon, compared with the U.S. average of 48.3 cents.

▪ An additional 10 cents a gallon is due to higher production costs, including the annual transition from winter to higher-cost summer fuel blends at refineries.

▪ About 10 cents this year comes from the state’s cap-and-trade system, a carbon pollution auction that extended to fuels on Jan. 1.

▪ And 10 cents is because California is an island in the oil market. It doesn’t need imports to meet demand, its pipelines only export oil to other states and it also sends gasoline abroad.

The bottom line is that gas prices are always higher here than most anywhere else in the country, no matter what the overall oil market is doing.

In January, when gas prices dipped below $2 in much of the country for the first time since 2009, they dropped only to $2.50 or so in most parts of California.

Just when you thought happy days were here again, they ended.

At least partly due to a strike at one refinery and an explosion at another, California prices spiked by nearly $1 in just a month by March. That sparked legislative hearings and more nasty arguments about whether Big Oil is gouging consumers.

Whoever’s to blame, it doesn’t change the pain at the pump for California consumers.

It’s a conundrum, actually. On the one hand, I want to pay less for gas. But I also know that higher prices will encourage us to drive less, which is better for climate change and air quality.

It’s all for a good cause, but one we’re all paying for every time we fill up.

By the numbers

Average household cost for gas in May:

  • California $232
  • Washington $184
  • New York $177
  • U.S. average $171
  • Florida $164
  • Ohio $161
  • Colorado $159
  • Texas $154

California Center for Jobs and the Economy analysis of U.S. Energy Information Administration data

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