California Gas Prices Set to Rise Due to New Taxes

News Summary

Beginning July 1, California drivers will see gas prices soar to as high as $6 a gallon due to increased taxes and regulations stemming from the Low Carbon Fuel Standard program. This anticipated rise will burden drivers with an additional annual cost between $600 to $1,000. Political opposition is growing, with petitions for repeal gaining traction and legislators calling the new measures ‘price gouging.’ Critics also question the effectiveness of the emission reduction goals associated with these new standards amid rising geopolitical tensions.

California drivers will face rising gas prices beginning July 1 due to new taxes and regulations, which are projected to push prices up to $6 per gallon. An increase in the state’s excise tax by 1.6 cents per gallon is one of the main contributing factors to this price hike. The new tax and regulatory measures are part of the broader Low Carbon Fuel Standard program approved by the state’s air resources board last November.

Estimates from the Automobile Club of Southern California suggest that the combination of the rising excise tax and the additional costs associated with the Low Carbon Fuel Standard could add anywhere from $600 to $1,000 to the annual expenses of California drivers. Additionally, State Senate Minority Leader Brian Jones has indicated that the new program could account for an increase of up to 65 cents per gallon in gas prices.

The anticipated rise in prices comes at a time when tensions in the Middle East and the closure of two key refineries in the state could exacerbate the situation further, potentially driving prices as high as $8 per gallon by the end of 2026, according to Jones.

The Low Carbon Fuel Standard aims to cut down greenhouse gas emissions and sets stricter regulations for fuel producers. The new standard is expected to add costs similar to the previous program, which already required an additional approximately 9 cents per gallon. The estimates for the new standard range from a 5 to 8 cents per gallon increase due to the revisions made to reduce emissions.

Current Gas Prices in California

Gasoline prices in California are already the highest in the nation, averaging $4.484 per gallon. Surveys conducted in San Diego on June 30 show that prices at local gas stations ranged between $3.99 and $5.39 per gallon.

Political Responses and Legislation

In response to the anticipated price increases, an online petition launched by Jones demanding the repeal of the Low Carbon Fuel Standard has already secured over 25,000 signatures. At the same time, Governor Gavin Newsom’s office has issued a fact-check memo disputing claims about the significant price effects from the new regulations, stating that the expected increase should only fall between 5 and 8 cents per gallon.

State legislators have voiced concerns over the implementation of the new fuel standard, calling it “price gouging” under the Newsom administration. In an effort to address these concerns, new legislation introduced by Democratic lawmakers aims to cap the fuel credit prices to prevent drastic spikes at the pump.

Criticism of Emission Reduction Estimates

Critics have begun to question the efficacy of the Low Carbon Fuel Standard, suggesting that projections regarding its potential emission reductions may be overly optimistic, particularly in relation to the use of biofuels. The California Energy Commission has been proactive, engaging in discussions with potential buyers to help keep the state’s refineries operational following the anticipated closures.

With the combination of new taxes, regulations, and external geopolitical factors, California drivers are preparing for a financially challenging situation at the gas pumps as prices are set to climb in the coming months.

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