Californians love their cars. Be it a lemon-yellow Lamborghini whizzing around Los Angeles freeways or a Jeep cruising the Pacific Coast Highway, getting behind the wheel is not just about coming of age — it’s a life goal in the Golden State. California also typically has the costliest gasoline in the U.S. (except when Hawaii holds that title), exacerbated by occasional price spikes and supply squeezes. The state responded in 2023 with a new law — SB X1-2 — designed in part to increase gasoline price transparency and assess potential ways to ensure consistent and affordable supply. In today’s RBN blog, we’ll examine the California Energy Commission’s (CEC) first assessment of the law’s impact.
As the most populous U.S. state, California was #1 in new car sales in 2023 with nearly 1.8 million vehicles sold — ahead of Texas, the second-most populous state, at 1.5 million vehicles. California also is a leader in climate goals and the California Air Resources Board (CARB), its air pollution regulator, in 2022 implemented a rule requiring all new car sales in the state to be zero-emission vehicles (ZEVs) by 2035. (ZEVs are plug-in hybrids, fully electric vehicles and hydrogen fuel-cell electric vehicles.) That’s a lot of electric vehicles (EVs) in a state that is home to more than 39 million people, or about 11% of the U.S. population. In Q1 2024, ZEVs accounted for 102,507 of the new cars sold in California — nearly a quarter of the total — according to CARB.
That said, gasoline continues to fuel most vehicles in the state, with millions of internal-combustion-engine (ICE) cars, SUVs and trucks expected to remain on California’s roads and highways beyond 2035, leaving the majority of motorists susceptible to sudden price spikes. In the months after the Russia-Ukraine war broke out in early 2022, gasoline prices rose across the U.S., but California prices (orange line in Figure 1 below) spiked much higher than the national average (blue line). There weren’t any unplanned outages among the state’s 10 refineries that at that time produced its unique gasoline blend known as California Reformulated Gasoline Blendstock for Oxygenate Blending (CARBOB), which meets the state’s tougher clean air requirements. (With the shutdown of P66’s Rodeo refinery earlier this year, California now has nine refineries in operation; back in 1982, it had 40.) However, unplanned outages stemming from operational issues combined with planned outages while demand was still high coming out of summer in 2022 and — bam! — retail prices surpassed $6 per gallon in September and October that year. Governor Gavin Newsom called on CARB to allow the distribution of winter-blend gasoline with fewer environmental blending restrictions — and therefore cheaper to produce — a month earlier than normal and prices retreated. A year later, prices spiked again amid similar circumstances.
Figure 1. Average California and U.S. Retail Gasoline Prices, 2014-24. Source: EIA
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