California’s gas tax is going up again, but prices should stay stable. Here’s why
The traditional summer spike in gasoline prices is unlikely–even though state taxes are going to go up.
Prices in California are and should remain fairly stable, said Patrick De Haan, lead petroleum analyst at GasBuddy, which tracks prices.
“The good news is that prices have come down substantially. The decline may be over for now, but they could go a little lower,” he said.
California’s tax on gasoline increases 1.7 cents a gallon to 59.9 cents on July 1. It’s the annual adjustment to reflect inflation..
People pumping gas in the state also pay the 18.4 cents a gallon federal tax as well as other state and local taxes and fees. The state gasoline tax burden remains the highest in the nation, the federal Energy Information Administration said.
Illinois is second and Pennsylvania is third. Alaska, whose state gasoline excise tax is 8 cents a gallon, is last.
The price of a gallon of gasoline in California is driven largely by oil prices. The California Energy Commission found in November that about 41%, or $2.02, of the cost is crude oil. Another 18%, or 89 cents, is taxes and fees.
The rest is refinery costs and profits, distribution costs, marketing costs and profits, and different state environment-related costs.
Usually prices jump in the summer as demand grows and hurricanes disrupt production on the Gulf Coast..
California’s average gasoline price Friday was well above the national average of $3.46 a gallon, according to AAA’s daily survey.
The state average for a gallon of regular gasoline was $4.81 Friday. That was down from $5.19 a month ago and $4.86 last summer at this time. Two years ago, prices in California hit $6.44 a gallon in mid-June.
Friday, the average price for a gallon of regular gasoline in the Sacramento area was $4.81, down from a week though up slightly from a year ago.
Other Friday averages: Fresno, $4.68; Merced, $4.78; Modesto, $4.62 and San Luis Obispo, $5.06.
De Haan and others saw the potential for some increases as summer goes on. Oil prices have recently slowly gone up as supplies were down and hurricane season begins.
But even with the uncertainty, De Haan predicted “stability or gentle increases” later in the summer.
California’s gasoline tax increase will take effect July 1. Most of that money will go to fund highway repair and construction in the state. Another chunk of the revenue will help local governments with their roads.
The tax increase is an adjustment for the cost of living required each summer, part of 2017 legislation aimed at improving the state’s roads.
