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3mo ago

California Gas Prices to Jump Up to 70 Cents on July 1 Under New Tax and Fuel Rules

Declining refinery output under tighter carbon standards is expected to amplify the impact of the tax hike on pump prices.

Gasoline prices above 6.00 dollars a gallon are shown at a gas station in Los Angeles on Tuesday, June 7, 2022.
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Overview

  • On July 1, California will increase its gas excise tax by 1.6 cents to 61.2 cents per gallon and raise diesel taxes to 46.6 cents.
  • Amendments to the Low Carbon Fuel Standard approved in late 2024 will impose stricter carbon intensity limits on fuels, adding as much as 65 cents per gallon in compliance costs.
  • Analysts estimate that the combined measures could lift pump prices by nearly 70 cents per gallon, driving averages close to or above $6 by the end of this year.
  • A University of Southern California study forecasts that prices could reach $8.40 per gallon in 2026 if refining capacity continues to decline.
  • Recent refinery closures and maintenance disruptions have reduced California’s in-state processing capacity by more than 25 percent, increasing reliance on external fuel supplies.