Living in California can mean sunny days, the beach, the forest, arts, culture, and entertainment all at your fingertips and within a short drive. But it comes at a cost. Rents are notoriously high as are the taxes. In fact, it has the highest sales tax, highest gas tax, and highest top rate on personal income tax, according to CalTax.org. If you’re a Cali resident, you know the gas prices are staggering right now. According to the U.S. Energy Information Administration (EIA), as of March 28th, gas in the state cost $5.76 per gallon. The U.S. average for the same period is $4.23. If you’ve been wondering, “Why is gas so expensive in California?!” read on to learn more and about a potential California gas rebate.
Why is gas so expensive in California?
Gas is so expensive in California for a number of reasons. As noted above, one of the reasons is having the highest gas tax in the U.S. Currently, the California gas tax is 51.5 cents per gallon.
This gas tax was set to rise in July and there were talks about pausing the hike for a six-month period. However, the bill proposing this idea was ignored twice — and then passed but replaced with a different measure, according to CalMatters.org.
The new measure would tax gas suppliers and offer a rebate to drivers thanks to the tax revenue.
Aside from the gas tax being so high, there are also environmental differences that play into it. The state of California has strict emission standards. Because of that, making the gas to meet the standards set is more costly. Additionally, it comes down to basic supply and demand.
According to the EIA:
“California gasoline prices are generally higher and more variable than prices in other states because relatively few supply sources offer California’s unique blend of gasoline outside of the state. California’s reformulated gasoline program is more stringent than the federal government’s program. In addition to the higher cost of this cleaner fuel, state taxes on gasoline in California are higher than they are in most states.”
So between high gas taxes, environmental factors, supply and demand, California gas prices remain high.
A potential California gas rebate is in the works
On March 23rd, California Governor Gavin Newsom released details about a proposal for a gas rebate that would put money back into the hands of drivers. This would help drivers offset the high cost of gas in the state.
According to the press release on the matter, the proposal would offer a $400 California gas rebate as a direct payment to drivers. The rebate would have a limit of two vehicles, so technically a family could receive up to $800.
The press release states:
“The tax refund will take the form of $400 debit cards for registered vehicle owners, and individuals will be eligible to receive up to two payments. An average California driver spends approximately $300 in gasoline excise tax over a year. The proposal provides up to two $400 rebates per vehicle, for owners to support families with more than one vehicle in use.”
What makes the California gas rebate beneficial to everyone is that eligibility is based on vehicle registration, instead of income or tax records. There is no income cap on eligibility. This is just a proposal as of now and would need to be passed.
Another proposal came from Senate President Pro Tempore (meaning for the time being) Toni G. Atkins and Assembly Speaker Anthony Rendon. Their proposal wouldn’t be universal for Californians and would offer a $200 California gas rebate to people earning less than $125,000, according to news site KRON4. Married couples earning less than $250,000 could get up to $400 plus an additional $200 for each dependent.
When will the California gas rebate go into effect?
California gas prices are high now and seem to rise every day. So if you’re looking for relief ASAP, you might still have to wait a bit.
These are still just proposals for now. On Newsom’s end, the release notes that he’ll be meeting with the legislature to iron out details of the proposal. The release states that once the proposal is approved by the legislature, payments could arrive in July.
The bottom line
If you’ve wondered why gas is so expensive in California, there are various reasons from taxes to supply and demand. Given these high-cost times and rising inflation, there may be a California gas rebate in the works to help lessen the sting of gas prices. In the meantime, you can save by driving less. If that’s possible for you, look into pay-per-mile insurance coverage. You’re used to paying for gas by the gallon, so it makes sense to pay for car insurance based on the miles you drive. Get a free quote with Metromile today.
Melanie Lockert is a freelance writer, podcast host of the Mental Health and Wealth show, and author of Dear Debt. She’s a cat mom to two jazzy cats, Miles and Thelonious, an amateur boxer, music lover, and needs coffee to function.