California’s Rising Gas Prices Spotlight Growing U.S. Divide

Volatile West Coast gas prices have triggered concerns about a broader effect on the economy.

October 25, 2019

VISTA, Calif.—Gasoline prices have skyrocketed in West Coast states, particularly in California, this fall, and analysts predict the volatility could impact the economy, the Wall Street Journal reports. Different taxes, environmental regulations and limited access to refineries can trigger huge seasonal variances in pump prices.

As refineries shut down to switch to the winter grade, prices in California jumped to more than $4 a gallon, with Nevada, Oregon and Washington state also seeing higher prices. Currently, the U.S. average cost for a gallon of regular unleaded gasoline is $2.60, according to GasBuddy. Fueling California’s higher prices is a higher gas tax, which the state raised earlier this year.

This week, California Gov. Gavin Newsom pressed the state’s attorney general to launch an investigation into allegations of price fixing or false advertising by big oil companies, which could contribute to the rising pump prices. Under the microscope are Shell and Chevron.

Catherine Reheis-Boyd, president of the Western States Petroleum Association, pointed out that state regulations have a large part to play in the rising pump prices. California has a higher emissions standard than the rest of the country.

“You have a lot of variation that can come from a combination of bottlenecks and market power” of energy companies, said Amy Myers Jaffe, a senior fellow focused on energy and climate change at the Council on Foreign Relations in Washington. Myers Jaffee has also looked into how gas prices impact consumer happiness. “It is the most visible price-change sign in America.”