California’s latest gas tax hike will drive prices to a staggering $8.44 per gallon by 2026, forcing working families to bear the crushing financial burden of radical climate policies.
Key Takeaways
- California Assembly approved a massive 50-65 cent gas tax increase set to take effect in summer 2025 under the Low Carbon Fuel Standard
- Two major refineries closing by 2026 will eliminate 20% of California’s gas supply, potentially causing prices to skyrocket 75% to $8.43 per gallon
- Republican attempts to block the tax increase failed with Democrats voting 39-18 against Assembly Bill 12
- The closures will eliminate 1,300 direct jobs and nearly 3,000 indirect positions while creating a gasoline deficit of up to 13.1 million gallons daily
- California already has the nation’s highest gas prices at $4.78 per gallon, with an additional excise tax increase to 61.2 cents coming July 1, 2025
Democratic Supermajority Imposes Massive Gas Tax Hike
The California Assembly has approved a substantial gas tax increase of 50 to 65 cents per gallon that will take effect in July 2025. This tax hike is part of the revised Low Carbon Fuel Standard (LCFS), which the California Air Resources Board (CARB) claims is necessary to incentivize cleaner energy adoption. Despite already having the nation’s highest gas prices at $4.78 per gallon, California Democrats pushed forward with the measure that will further burden residents struggling with high living costs. Republican lawmakers attempted to block the increase through Assembly Bill 12, which proposed a constitutional suspension, but were overwhelmingly defeated in an 18-39 vote.
Earlier this year, Senate Republicans led by Minority Leader Brian Jones tried to repeal the tax increase through Senate Bill 2, which would have voided the CARB amendments. That effort was defeated 10-23 along party lines. The state will also increase its gas excise tax to 61.2 cents per gallon on July 1, compounding the financial impact on drivers. These combined tax increases, along with other factors, are projected to push gas prices to unprecedented levels, causing ripple effects throughout California’s economy.
Refinery Closures Create Perfect Storm for Economic Crisis
The tax increase comes as two major California refineries prepare to shut down – Phillips 66 in Los Angeles by the end of 2025 and Valero in Benicia by April 2026. Together, these refineries produce approximately 20% of California’s gasoline supply. This dramatic reduction in refining capacity, combined with the new tax burden, creates a perfect storm that threatens to devastate California’s economy. The closures will eliminate 1,300 direct jobs and nearly 3,000 indirect positions, while creating a gasoline deficit that could reach 13.1 million gallons per day.
“If the Governor doesn’t act now, Californians will be blindsided by sticker shock at the pump and skyrocketing prices on everyday goods,” Stated Leader Jones, Senate Minority Leader.
A comprehensive analysis by USC Professor Michael Mische projects that gas prices could increase by a staggering 75% to $8.43 per gallon by the end of 2026. This dramatic rise would affect virtually every sector of California’s economy, from transportation and food delivery to agriculture, manufacturing, and healthcare. The supply chain disruptions would be felt far beyond the gas pump, potentially triggering widespread inflation throughout the state.
Critics Blame Newsom’s Policies for Crisis
Republican lawmakers have placed responsibility for the impending crisis squarely on Governor Gavin Newsom’s shoulders. They argue that his administration’s aggressive climate policies have made it virtually impossible for refineries to operate profitably in California. Senate Minority Leader Jones has suggested several potential solutions, including investment tax credits and regulatory relief, but these proposals have gained little traction with the Democratic supermajority.
“Let’s be clear: Newsom owns this gas crisis. His policies have made it nearly impossible for California refineries to stay open. As Newsom eyes the White House, America should be watching closely: the crisis he created here could be the next national nightmare.”
Perhaps most concerning is CARB Chair Liane Randolph’s admission that the board did not consider the economic impact of its regulations on gas prices before implementing them. This revelation has fueled criticism that California’s environmental regulators are disconnected from the economic realities faced by ordinary citizens. As the state continues to push forward with its climate agenda regardless of cost, many Californians are questioning whether they can afford to remain in a state that seems increasingly hostile to working families.
“Reductions in fuel supplies of this magnitude will resonate throughout multiple supply chains affecting production, costs, and prices across many industries, such as air travel, food delivery, agricultural production, manufacturing, electrical-power generation, distribution, groceries, and health care,” Said Michael A. Mische, Professor at USC.
