You’re sitting at a red light in Los Angeles or maybe idling in San Jose, looking at the glowing digits of a Chevron sign. $4.21. $4.50. Maybe even higher if you’re in a "gas desert." It’s frustrating. Honestly, it’s enough to make you want to trade the truck for a bicycle. But while the rest of the country is seeing national averages dip below $3.00, Californians are still stuck in a different economic reality.
Why are the gas prices going up in California while they seem to be cooling off everywhere else?
It isn't just one thing. It’s a messy, complicated "perfect storm" of refinery drama, environmental taxes, and a very specific type of fuel that nobody else uses. If you’ve heard people blaming "Big Oil" or "Sacramento" exclusively, they’re usually only holding one piece of a very large puzzle.
The Refinery Squeeze Is Real
California is basically an energy island. We don't have pipelines bringing in gasoline from Texas or the Midwest. We have to make it here, or we have to ship it in on massive tankers from overseas.
Right now, the big story is the "refinery crunch."
Phillips 66 started winding down its Los Angeles refinery in late 2025. Then you've got Valero’s Benicia refinery, which is planning to idle its main operations by April 2026. These aren't just small shops; we're talking about a significant chunk of the state’s ability to turn crude oil into the gas you put in your tank.
Professor Michael Mische from USC has been sounding the alarm about this for a while. He’s noted that when you lose nearly 20% of your refining capacity, the math gets ugly. When supply drops and demand stays the same—because let’s face it, most of us still have to drive to work—the price at the pump has nowhere to go but up.
Why are they closing?
- Maintenance costs: These facilities are old and incredibly expensive to keep up to code.
- Regulatory pressure: California’s Low Carbon Fuel Standard (LCFS) makes it tougher for traditional refineries to turn a profit compared to other states.
- The EV Shift: With the state pushing hard for 100% zero-emission vehicle sales by 2035, companies aren't exactly rushing to invest billions into oil infrastructure that might be obsolete in a decade.
That "Boutique" Fuel Blend
You’ve probably heard about "summer blend" and "winter blend." In most states, this is a minor price hiccup. In California, it’s a logistical nightmare.
The California Air Resources Board (CARB) requires a specific, "cleaner-burning" recipe to combat the state's famous smog. It’s great for our lungs, but it’s terrible for our wallets. Because only a handful of refineries can even make this specific blend, any time a single refinery goes down for "unplanned maintenance," the market panics.
We can't just call up a refinery in Arizona and ask for a refill. They don't make our "boutique" gas.
The Tax Man and the Hidden Costs
Let’s talk numbers. California has the highest gas tax in the nation. As of early 2026, you're looking at roughly 60 to 70 cents per gallon just in state taxes.
But it’s not just the visible tax at the pump. There are "hidden" costs that most drivers never see on the receipt:
- Cap-and-Trade: This program requires fuel providers to buy "allowances" for the carbon they emit. Those costs are passed directly to you.
- Low Carbon Fuel Standard (LCFS): Another layer of environmental fees aimed at reducing the carbon intensity of transportation fuels.
- The "Mystery Surcharge": For years, the California Energy Commission (CEC) has investigated why California prices are so much higher than the rest of the US even after accounting for taxes and environmental fees.
Recently, the Division of Petroleum Market Oversight (DPMO) pointed out that branded gas stations (the big names you know) often charge significantly more than unbranded ones. They found that over the last decade, Californians have essentially "overpaid" billions because of this price gap.
Will Prices Hit $8?
There’s been a lot of scary talk lately. Some analysts, including Mische, have warned that if the refinery closures hit as hard as projected by late 2026, we could see prices spike toward $8.43 a gallon.
Is that a guarantee? No.
Governor Newsom and the state legislature have been trying to scramble. They passed SB X1-2 and AB X2-1 to give the state more "watchdog" power over refinery margins. There’s also a push to allow higher ethanol blends (like E15), which some studies from UC Berkeley suggest could shave 20 cents off a gallon.
But these are long-term fixes. In the short term, when a refinery like Benicia idles, the state has to rely more on imports. And importing gas from overseas is expensive, volatile, and leaves us at the mercy of global shipping costs.
How to Handle the Hike
Since we can't change the state's tax code or fix a refinery ourselves, what can you actually do?
💡 You might also like: Big Lots Waldorf MD: What Most People Get Wrong About the Closing
Go unbranded. Honestly, the "premium" gas at a name-brand station is often the exact same base fuel as the "no-name" station across the street, just with different additives. If you can find an unbranded station, you’re often saving 30 to 40 cents a gallon right there.
Watch the "Refinery Calendar." Prices usually spike in the spring (March/April) when refineries switch from winter to summer blends and perform "turnaround" maintenance. If you can avoid long road trips during those transition weeks, your bank account will thank you.
Check the apps. It sounds basic, but in California, gas prices can vary by 50 cents just by driving three blocks. Use tools like GasBuddy or even Google Maps to find the "valley" in the price peaks.
Understand the "EV Math." If you're spending $400 a month on gas, that Tesla or Rivian starts looking a lot more like a rational financial decision than a luxury purchase. Even with California's high electricity rates, the "per mile" cost is still significantly lower for most drivers.
The reality is that why are the gas prices going up in California is a story of a state in transition. We are moving away from oil, but the infrastructure for oil is crumbling faster than the new system is being built. Until that balance levels out, the Golden State is likely to keep seeing some of the highest numbers in the country.
Next Steps for You:
If you're feeling the squeeze, check your tires. Under-inflated tires can drop your fuel economy by 3%. It sounds like a "dad" tip, but at $4.50 a gallon, every mile matters. Also, keep an eye on the California Energy Commission's monthly reports; they are becoming much more transparent about which companies are hiking margins the most.