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59.6 Cents per Gallon: California Gas Tax Hike Ignites Controversy Over Fuel Prices and Transportation Infrastructure

California Gas Tax Hike Sparks Heated Debate Over High Prices and State Policies

Governor Newsom and the Oil Industry Clash Over California Gas Tax Hike and Fuel Costs

State politicians and the petroleum sector are once again debating the California gas tax hike. The state excise tax on gasoline increased by 1.7 cents per gallon to 59.6 cents per gallon on July 1. The California gas tax hike is a component of the yearly inflation adjustment mandated by Senate Bill 1 which was enacted into law in 2017. Over a ten-year period, this tax is anticipated to generate $52.4 billion for infrastructure and road development. According to the Orange County Register, the excise tax increase comes as Californians already pay the highest gas prices in the country averaging $4.79 per gallon statewide compared to the national average of $3.50. This rise in gas prices has led to increasing tension between the petroleum industry and state policymakers. Governor Gavin Newsom has accused oil companies of price gouging while the industry blames state policies for the high prices.

Chevron has responded by putting up signs at gas stations and pointing out that gas is cheaper in other states and encouraging drivers to contact their legislators. The Western States Petroleum Association and other groups have launched similar campaigns. The debate has intensified with the passage of Senate Bill X1-2 which created the Division of Petroleum Market Oversight. This new division will monitor the state’s crude oil and gasoline markets requiring refineries to report maintenance schedules and provide daily market updates. The bill also allows the California Energy Commission to penalize oil companies that exceed a “maximum gross refining margin.”

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59.6 Cents per Gallon: California Gas Tax Hike Ignites Controversy Over Fuel Prices and Transportation Infrastructure (PHOTO: Los Angeles Times)

Governor Newsom Battles Oil Industry Amid California Gas Tax Hike and Push for Electric Vehicles by 2035

Furthermore, Governor Newsom has been vocal against the petroleum industry highlighting the new price gouging law and celebrating the industry’s withdrawal of a proposed referendum against a state law imposing new restrictions on oil and gas wells near homes and schools. The California Independent Petroleum Association plans to challenge the law in court arguing it will raise gas prices and increase reliance on foreign oil. California is pushing forward with its goal to eliminate the sale of new internal combustion cars and trucks by 2035 and starting with a requirement for 35% of new vehicles to be electric or hybrid by 2026 despite these tensions. It’s noteworthy that California which was once a leading oil producer has significantly reduced its output as the debate rages. In 1985, California produced 394 million barrels of oil but by 2023 production had fallen to just over 112 million barrels.

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