Aug 23 2009
Why are California gas prices so high?
Everyone who lives in California knows that gas prices are always higher than the national average reported on the news. Everyone who travels in California knows that gas prices are always higher. The question is why?
The simple answer is that taxes make everything in California more expensive. Gas taxes here are $0.18 per gallon. This is the second highest in the nation after New York. California taxes gas in order to pay for several things which it says are related to gas, or transportation broadly. The gas tax pays for road repairs, new roads and bridges, and some of the public transportation budget. However, California is a big state, and the money doesn’t go very far. Anyone who has driven on the highways in California compared to the highways in other states knows that California highways are in a state of disrepair. Some of this is due to how they were built, but a lot is simply due to the fact that the gas tax money designated for highways doesn’t go very far.
That is, when the gas tax goes there at all. Every so often the California Legislature raids the gas tax monies for other purposes, with the promise to repay the money. So essentially, the gas taxes fund whatever the Legislature wants it to fund, rather than funding the things it is supposed to fund. However, with the newest budget plan, the tax is now a fee. Which means the monies have to go to something related to the gas, and provide a direct benefit to those who buy gas. Hopefully this will reduce the frequency that gas money is raided.
The second reason gas is so pricey in California is because of demand. California has no real public transportation. San Francisco has Muni, which goes some places. But between the buses and the trains, Muni is complicated and costly. BART is limited in the places it goes, and so is only useful for some trips. Sacramento has Light Rail, but again, the limited locations of Light Rail make it impractical to use for anything other than commuting to downtown, or to the Folsom Outlets. LA has some public transportation, but it is as limited as the rest of the state. Various counties have some bus services. There is nothing state-wide that is public transportation. This means Californians drive, which raises the demand for gas, which raises the prices.
The last thing is that California has a law which specifies the type of gas mixture that can be sold in California. Only California refineries, or some place in Finland, make this mixture. This means that California has to import its oil and refine it here. If there are any problems in production, supply goes down and prices rise. When the Tosco refinery has a fire and has to shut down for two days, that impacts the supply of gas in California.
There also is not as much storage for refined gas in California as other states have. The Legislature and other planning commissions do not want gas storage built because of its possible environmental impacts. The Legislature also doesn’t want more refineries built because of their environmental impacts.
The Legislature is who mandated the special blend used in California. It was an attempt to keep the air cleaner. It is unclear whether this has really worked, or whether other things have helped improve air quality.
However, if the Legislature really wanted to improve air quality, they would spend money on public transportation that links places people go in California. They would mandate that cities, when they are expanding, plan public transportation that can serve the expected population. Seattle has a great public transportation system because they planned for the system, ten years ago. They didn’t build and then plan, they built and planned at the same time.
The Legislature seems to have no problems mandating all kinds of things to the various localities. In fact, they do it with such regularity that there is a law that says that state has to pay for its mandates (which they might do, 30 or 40 years later). Why not mandate something that will matter in the long run, like public transportation, rather than mandating how many days an animal must be in the shelter before it can be adopted or killed?
Gas prices are higher in California than anywhere else in the nation. This isn’t going to change anytime soon. As long as California drivers use gas, the prices are going to stay high. If everyone in California took one day off of driving their car and walked, or rode public transit, where ever they went, this would make a dent in the gas usage. If everyone did this one day a month, that would make a huge dent in gas usage.
Why not do something that matters? If gas prices are too high for you, you know the reasons. Change your habits. You aren’t going to change the tax situation, and the taxes are only going to get higher on gas. Gas is an easy thing to tax: people use it and need it. Therefore, you can tax it and expect revenues. Since the tax situation won’t change, something else has to change to make gas prices come down: demand or the blend. The blend of gas won’t change. Which means demand is the only factor left. Change demand, and gas prices in California will change.
