Gas prices in California have been steadily increasing over the past year. The average cost in California has reached an overwhelming $4.54 per gallon, while the national average is much lower, standing at about $3.38 per gallon. A year ago, the average price of gas in the U.S. was only $2.17, according to the American Automobile Association.
In a small town named Big Sur, California, gas prices have skyrocketed at around $7.59 per gallon for regular, $7.99 for midgrade, and $8.49 for premium, as reported by GasBuddy. “There’s a high likelihood that’s the priciest gas station in the country,” mentions De Haan, the Head of Petroleum Analysis at GasBuddy, a company that helps users find gas prices. Haan explains that “What’s been increasing prices is the imbalance in the market…Supply is still 10-15% below pre-Covid levels, while demand is back to pre-Covid levels and at some points this summer hit all-time high levels.” Since the supply does not meet the demand, the prices are skyrocketing.
So why are California gas prices so expensive? According to the Los Angeles Times, the new additives in our fuel and the price of crude oil in California keep increasing. A jump in crude oil costs, which account for slightly more than half of the pump price, has contributed to soaring gasoline prices.” According to an analysis done by Investopedia, “A correlation coefficient between crude oil and natural gas of 0.25 indicates that a change in oil price can account for 25% of the change in natural gas prices [on average].” This study correlates with the change in gas price, demonstrating that crude oil is the biggest factor in determining the price of gas. In addition, “The price of oil is based on crude oil…California gas is specifically high compared to other states because of our additives, and the state charges taxes for every gallon of gasoline sold,” says Otto Lee, a member of the Santa Clara County Board of Supervisors.
One other reason for this increase is the cost of living in California, which is relatively more expensive in relation to other states. “Another reason is because the operation of a gas station needs to pay rent, and the rent in California is the highest, so they have to charge higher in order to pay off their rent…The operators in California probably get paid the highest compared to other states,” Lee additionally reveals. Statistics have shown that the price to rent or buy land in California is much more than double the national average. According to Earnest, “California tops the state list, with a median rent price of $1,901…the average rent price in the U.S. is $1,249.” This research shows that the rent price in California is about 52.2 percent higher than in the U.S.
Other sources reveal additional reasons why gas prices may be rising in solely California. “Gas prices were notably high in the Bay Area this summer due to labor shortages, in addition to minor refinery issues,” claims the San Francisco Chronicle. Out-of-state refineries are not equipped to generate California Reformulated Gasoline (RFG), a “clean-burning” fuel that is better for the environment as it generates less emissions from motor vehicles and engines. Also, supplies are limited due to strict environmental restrictions. As a result, California drivers potentially pay a significantly higher price in gas than other states. The demand for gas in the west resembles an added pressure.“Demand is back. It’s been a tough couple of years with the pandemic,” AAA Doug Shupe explains. “Now, with the increased vaccinations, more people want to get out there to share the open roads with friends and family.”
Gas prices are continuing to rise around the state. As of November 2021, gas prices have skyrocketed within less than a year. In the Bay Area, gas used to be $3.24 per gallon in January, but now, prices have risen to $4.66 per gallon, demonstrating an estimated $1.42 increase. This is mainly due to the price of crude oil, the cost of rent, labor shortages, and a special fuel blend. Although many people are frustrated with the constantly increasing gas prices, individuals should take into consideration that many factors play a part in this nationwide debacle.