California’s gasoline taxes are going up again Saturday.
That means there’s little hope that the price at the pump, already more than $1.25 above the national average, will come down soon.
There is a possibility the per-gallon price will drop 10 to 25 cents by Labor Day, said Patrick De Haan, head of petroleum analysis at GasBuddy, as supplies increase.
But prices drop only “if nothing happens” that would tighten supply. And stuff often happens. Refineries can shut down for various reasons. Demand spikes. Bad weather affects infrastructure.
De Haan was less concerned about the overall impact on prices of the increase in the state gasoline tax, which goes up 4 cents a gallon to 57.9 cents on Saturday. That’s nearly double the state gasoline tax rate nationwide, which is about 30 cents, the nonpartisan Tax Policy Center found.
The increase is an inflation adjustment required each summer under 2017 legislation that helps pay for road construction and maintenance.
Two-thirds of the money from the gasoline and diesel fuels tax goes to state highway programs, while the rest goes to cities and counties to help with local street and road maintenance and construction.
Republicans in the California Assembly tried to delay the tax increase for a year but the effort failed Tuesday.
GOP lawmakers warned that the higher gasoline prices will rippled through the economy.
“Pushing the gas tax even higher means families will have fewer opportunities and less food on their table,” said Assemblywoman Laurie Davies, R-Laguna Niguel, who pushed the amendment for the delay. “That is not the California I want to live in”
As of Wednesday, the price of a gallon of regular gasoline in California averaged $4.83, according to AAA.
In Sacramento, the average was $4.73. Other averages Wednesday in metropolitan areas: Fresno, $4.77; Modesto, $4.63; Merced, $4.75, San Luis Obispo, $5.12.
The national average Wednesday was $3.56.
All those prices are much lower than a year ago, when the California price peaked at $6.44.
California is still expected to remain well above the national average this summer. Wednesday, its average price for regular was second highest in the nation, trailing only Washington, where a gallon cost about $5. Least expensive gasoline was in Mississippi, at about $2.98.
Why gasoline prices go up
One reason for California’s high price is its taxes. The taxes and fees Californians pay at the pump, which includes the 18.4 cents a gallon federal gasoline tax, are the nation’s highest.
Another potential factor pushing prices is demand. The Federal Reserve has been trying to cool the economy, which would lower demand.
But the economy continues to grow, and in California, the latest UCLA state economic forecast is uncertain whether the state will endure a recession later this year.
Even if there is a recession, the forecast said, its impact on California would be less than on the nation as a whole. If there is no recession, it predicted “California grows, and in fact continues to grow faster than the U.S.” More growth tends to mean more demand.
One of the variables affecting state gasoline prices is supply. If a state refinery shuts down, it’s usually more difficult to get gasoline to the state because it lacks the infrastructure needed to rapidly bring large quantities of oil to the state from other domestic sources.
“It can take several weeks to find and bring replacement motor gasoline from overseas that meets California’s unique specifications,” the federal Energy Information Administration has written in an analysis of California energy
One of the best hopes for lower prices is that the summer gasoline blend becomes more plentiful later in the season. That blend is aimed at easing pollution in the warmer months and is usually more expensive than the blend at other times of the year.
“Generally speaking gas prices are somewhat lower at the end of summer as the supply builds up,” De Haan said.
