California’s Retail Gasoline Prices Remain Highest in Continental U.S.: EIA

Retail regular grade gasoline prices are consistently higher in California compared to any other state in the continental U.S., according to a May 5 report published by the U.S. Energy Information Administration. Retail gasoline prices often exceed the national average by over $1/ per gallon (gal).  The high retail gasoline price in California can be attributed to environmental requirements, state taxes and fees, special fuel requirements and isolated petroleum markets.

The California Energy Commission projects that environmental compliance expenditures account for around $0.54/gal as of March 2025. A number of state programs reflect expenditures associated with carbon intensity and fuel supplier emissions, and these expenditures are usually paid by the end user. California drivers also pay the highest taxes as of March 2025, equating to $0.90/ gal. Moreover, the state also mandates a special blend of gasoline intended to enhance air quality and lower pollution.

California gasoline prices are also impacted by supply side shortages compared to the rest of the U.S. The majority of the gasoline used in the state is refined within the state, due to a shortage of petroleum infrastructure. California is geographically inaccessible from other U.S. refining centers, due to lack of pipeline interconnections.

West Coast refineries have historically had lower stock levels compared with the U.S. average. In October 2024, California Governor Gavin Newsom signed legislation allowing the state’s regulators to establish and alter minimum petroleum product stock levels for refiners in California, in order to deal with the state’s fuel price volatility. The law permits regulators to alter minimum storage volumes based on seasonal and regional market conditions, storage capacity and refinery size. It also permits the commission to consider the utilization of a tradeable mechanism for compliance with the minimum stock regulation, which California has used previously for programs like the Low Carbon Fuel Standard. The bill aims to dampen gasoline price volatility.