(Bloomberg) — Los Angeles drivers know they pay more for gasoline than the average US driver: It’s the price for cleaner air in a state that’s made being green part of its DNA.
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What motorists in LA — a city famed for its car culture — may not realize is that the amount they pay over the national average soared to more than $1.80 a gallon in late March, the widest in at least 10 years, according to data from the AAA.
So far, at least, the cash squeeze at the pump isn’t crimping travel plans, even though each tank costs about $24 more. The Auto Club of Southern California predicts 2.6 million local residents will take to the highways this Memorial Day weekend. That’s up 5% from 2021 but about 7% below 2019, before the Covid-19 pandemic.
The cause for the spike in prices earlier this year was refinery outages, according to Patrick De Haan, head of petroleum analysis at GasBuddy, which tracks prices at 150,000 US gas stations.
While the local refinery issues have largely been resolved, prices nationally have kept on climbing. Regular gasoline rose to $6.09 a gallon in LA this week, according to the AAA, still almost $1.50 more than the national average of around $4.60.
The higher prices in California are partly the result of taxes and state programs to reduce greenhouse gases, like a rule requiring a less-polluting blend of fuel. These measures add about $1.30 to the cost of a gallon, according to the Western States Petroleum Association, a trade group.
California also imports both oil and refined products, which must be trucked in or brought by tanker.
“We don’t have pipelines coming in from Texas and other parts of the country,” said Kevin Slagle, a spokesman for the oil group. “We have to ship it in from around the world.”
Prices, including the extra amount LA drivers pay, could spike again in the summer when travel picks up and a planned increase in the state tax is due to take effect. At the same time, a Chevron Corp. refinery in the state is scheduled for maintenance, and a South Korean refinery that supplies the US West Coast had some units offline after a fire.
To offer drivers some relief, Governor Gavin Newsom, a Democrat who’s running for re-election this year, has proposed an $11 billion package that includes $400 refunds to personal car and truck owners, with a maximum of $800 for up to two vehicles.
A “very significant factor is simply the increased cost of everything in California,” said Doug Shupe, an Auto Club spokesman. “That includes labor, electricity and other energy sources, and a myriad of other factors that are more amorphous, like increased business litigation expenses. All of these factor into higher prices in California for just about everything.”
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