The California Air Resources Board (CARB) is set to increase gas taxes by approximately 50 to 65 cents starting July 1, 2025, as part of the state’s updated Low Carbon Fuel Standard. Efforts by California Republicans in the Assembly to suspend the constitution and bring Assembly Bill 12 to the floor, which aimed to halt the tax increase, failed with an 18-39 vote. The measure is expected to raise gas prices further. Meanwhile, the California Assembly is also considering a bill to delay a planned tax hike on marijuana, with cannabis industry advocates arguing that the increase could exacerbate the illicit market. The gas tax increase has drawn criticism from Republican politicians, who argue it will burden consumers, while the Democratic supermajority supports the measure. The vote reflects ongoing political divisions in California over environmental regulations and taxation policies.
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California Price at Pump Could Hit $8.44/Gallon in ’26 Due to Refinery Closures, Regulations
California Price at Pump Could Hit $8.44/Gallon in ’26 Due to Refinery Closures, Regulations
California gas prices are already the nation’s highest, at $4.78 per gallon for regular-grade gasoline Tuesday, according to AAA.
The new study from University of Southern California professor Michael A. Mische examined California’s historical gas prices, oil supply, and refining capacity, and modeled the likely impact of refinery closures and costly new fossil fuel and refinery fees and regulations.
“The shutdown of the two California-based refineries could possibly place the Golden State in a precarious economic situation and create a gasoline deficit potentially ranging from 6.6 million to 13.1 million gallons a day, as defined by the shortfall between consumption and production,” wrote Mische. “Reductions in fuel supplies of this magnitude will resonate throughout multiple supply chains affecting production, costs, and prices across many industries, such as air travel, food delivery, agricultural production, manufacturing, electrical-power generation, distribution, groceries, and health care.”
“Based on current demand and consumption assumptions and estimates, the combined consequences of the 2025 Phillips 66 refinery closure and the April 2026 Valero refinery closure, together with the potential impact of legislative actions such as, but not limited to, the new [low-carbon fuel standard], increase in excise taxes, Cap and Trade, SBX1-2, and ABX2-1, the estimated average consumer price of regular gasoline could potentially increase by as much as 75% from the April 23, 2025, price of $4.816 to $7.348 to $8.435 a gallon by calendar-year end 2026,” continued Mische.
