Due to a number of new taxes and restrictions, California drivers should expect a significant hike in gas prices beginning on July 1. Estimates of how much prices will increase vary among experts, but some predict that they may rise as much as $6 per gallon. The state excise tax will increase by 1.6 cents per gallon, which is the first part of the price increase. But this is only the start of the price increases.
In November, the state’s air resources board authorized the Low Carbon Fuel Standard aid, which is projected to have a more substantial impact. Although the goal of this program is to lower greenhouse gas emissions in California, gas producers will face more stringent regulations as a result. Read the following post to know more.
Gas prices in California will rise on July 1
On November 8, 2024, authorities revised their clean fuel policy to line with California’s 2035 ban on the sale of new gas-powered vehicles by reducing the carbon power of transportation gases by 30% by 2030 and 90% by 2045. While punishing high-carbon producers, like as gas refineries, who must purchase credits to comply, the scheme encourages low-carbon fuels, such as biofuels and electric vehicle charging.
According to managers, this will lead to $4 billion in clean transport savings each year, reducing air contamination, including 558 million metric tons of greenhouse gases by 2045, and saving $5 billion in healthcare expenditures. Beginning July 1, 2025, the update is expected to increase gas prices in California by 47 to 65 cents a gallon; some estimates put that amount at $0.85 by 2030 and $1.50 by 2035.
California Gas Price Rise 2025 – Overview
| Post Title | Gas prices to rise in California from July 1: Know how much extra you will have to pay |
| Department | US Energy Information Administration |
| State Department | California Energy Commission |
| Increased by | Mentioned below |
| Implemented by | 1 July, 2025 |
| Category | Finance |
| Year | 2025 |
| Official portal | eia.gov/ energy.ca.gov |
California Gas Prices are Set to Increase in 2025: Explained Here
Because California lacks petroleum infrastructure connections, the majority of the state’s gasoline is refined domestically. Because there aren’t any pipelines that serve California from over the Rocky Mountains, and there aren’t many that travel from the Gulf Coast to the West Coast, California is geographically far from other refining hubs in the United States.
Few refineries outside of California can satisfy the strict fuel mixing regulations set by the state, despite having physical access to the gasoline markets in the state. California also imports gasoline to meet its fuel supply demands from other nations, like South Korea and India. California-specific gasoline is produced in other nations, but due to high shipping costs, imports are typically only available during refinery outages during the summer driving season.
Why California Gas Price Inflation?
A short while ago, petrol prices were skyrocketing: Two economic disruptions—the pandemic-related supply shocks and Russia’s invasion of Ukraine—were primarily responsible for the price spikes in 2021 and 2022. When the two were combined, energy markets were severely impacted, and prices never fully returned to their pre-pandemic levels. Before the epidemic, normal petrol prices averaged $2.601 per gallon in 2019, according to EIA data. After Russia invaded Ukraine, the national average rose and peaked on June 14, 2022, at $5.016 a gallon, according to AAA.
Although petrol prices have now dropped, they haven’t reached their pre-pandemic levels. Gas prices have increased by roughly 9% in the last six years. California regularly has retail rates for standard grade gasoline that are more than a dollar per gallon more than anywhere else in the continental United States.
This high price is initiated by a number of variables, such as state taxes and fees, environmental regulations, petroleum markets that are isolated, and particular fuel necessities. Taxes and levies, marketing and distribution expenditures, refining costs, and basic oil prices all affect retail gas prices. As of March 2025, California drivers pay the highest taxes at the pump, which total $0.90 per gallon (gal) after municipal, state, and federal taxes. Moreover, California requires gasoline to have a specific blend that lowers emissions and enhances air quality.
How much have gas prices gone up in California?
It will increase from 59.6 cents to 61.2 cents a gallon this year. Additionally, diesel fuel prices will rise from 45.4 to 46.6 cents per gallon. Beginning on July 1, drivers in California should be ready for higher fuel prices. Because of changes in inflation in the nation, authorities have chosen to adopt harsher actions.
In order to keep their finances in balance, thousands of people will have to take additional financial precautions due to the increase in gasoline taxes. The state of California raises fuel prices annually in response to inflation, so even while the news is not well received, it is normal. The rise is in line with the current economic circumstances facing the nation.
How California’s Gas prices affect goods & Services?
In 2025, it will not be available in the subsequent states: Indiana, Florida, Georgia, Idaho, Iowa, Mississippi, Oklahoma, South Dakota, Tennessee, Alaska, Texas, and Wyoming, South Carolina. Increasing fuel prices for these businesses results in improved operational costs, which are naturally transferred to final clients in the form of higher valuing for the goods and services they buying. The Caltax claims that within the past ten years, the gasoline tax rate has more than doubled. In 2017, Senate Bill 1 raised the rate by 12 cents a gallon, causing one of the biggest points.
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