California Faces a Self-Created Oil and Gas Crisis

Time matters, and California is running out of it. Lawmakers in Sacramento must act to address the state’s fuel and affordability crises.

Since 2001, California gas prices have increased 162%. Today, we pay about 43% more than the national average, and that figure would likely be far higher if not for record-high domestic oil production.

That tailwind unfortunately won’t last. While crude oil prices have fallen 19% since January, California costs and taxes have increased, now accounting for approximately 26% of the retail price of gasoline. And with the highest state excise tax per gallon in the nation, California makes several times more than a typical retailer for the same gallon of gas sold.

Platitudes and rhetoric aside, the truth is California is staring at a near-term gasoline shortfall, driven largely by the pending closure of two refineries, the highest operating costs in the nation and decades of falling in-state production. What these fuel supply challenges have not resulted in is a gigantic drop in demand. This has and will continue to lead to a greater dependence on foreign fuel, greater emissions, increased exposure to global volatility, and ultimately an increase in the price Californians pay for the fuel that powers the world’s fourth-largest economy.