Why California Gas Prices Spike in 2025 | Explained

Today, California’s average gas price stands at $4.71 per gallon, down slightly from last week’s $4.79 but still $1.58 above the national average of $3.13. San Francisco drivers are paying $4.95/gallon, while Sacramento sees lower prices at $4.65/gallon.

What’s Driving the High Prices?

Several factors are pushing California’s gas prices upward:

1. Refinery Closures: The planned shutdowns of Phillips 66 and Valero refineries will reduce California’s fuel supply by 20%, potentially driving prices to $8.43/gallon by 2026 (USC study).

2. Low Carbon Fuel Standard (LCFS): New regulations effective in 2025 could add up to $0.65/gallon, as refiners pass compliance costs to consumers.

3. High Taxes: California’s combined state and federal gas tax is $1.83/gallon, the highest in the nation.

4. Market Volatility: Recent refinery maintenance and low inventories have increased wholesale prices, especially in Northern California.

How to Cope with Rising Costs

• Consider Electric Vehicles: With 25% of new cars sold in California being electric in 2024, EVs could save you $105–$138/month compared to gas vehicles.

• Carpool or Use Public Transit: Reduce fuel costs by sharing rides or using BART in the Bay Area.

• Track Prices Daily: Follow our daily gas price updates to find the cheapest stations near you.

Subscribe and Stay updated on California gas prices and discover expert tips, fuel discounts, and smart credit card rewards programs to save money at the pump with California Gas Savings!