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Gas Prices to Rise, 2025

 

Last updated 11/17/2024 at 9:37am



Drivers in the state of California will see the price of gas rise when at the pumps, due to the state adopting new climate rules that will toughen fuel standards.

The Low Carbon Fuel Standard was approved by the California Air Resources Board, who set new goals for slashing emissions from fuel by 30% by 2039 and 90% by 2045.

The vote comes a day after Governor Gavin Newsom called the state Legislature into a special session to protect some of California’s environmental and other policies ahead of former President Donald Trump’s second term in office.

The CARB contends that the new special blend is necessary to achieve carbon and methane emission reduction targets and is consistent with Governor Newsom’s 2035 mandate to eliminate the sale of internal combustion car sales and 2050 targets. By its own admission, the CARB projected that the new special blend could increase the retail price of gasoline by $0.47 a gallon. However, in hearings, CARB staff noted that “Any estimate of cost from the LCFS regulatory proposal are inherently uncertain because they involve conducting estimates and speculative projections about what may happen in the future.”

Concerns about gas prices have fueled the debate surrounding the board’s proposal since its release last December. But much of the agency’s revamp of its fuel rules focuses on intricate disputes among environmentalists, oil companies, dairy farms that use manure to produce fuels, biofuel companies and other low-carbon fuel providers.

The California Air Resources Board says the program will ultimately lower the cost of sustainable transportation fuels.

The projected increase could drive California’s retail gasoline prices to exceed the national average by as much as 62% by late 2025. The increase will contribute to inflation, add to the exceptionally high cost of living in California where only 16% of residents can afford to buy a home, and has a disproportionate and adverse impact on lower income Californians.

Environmentalists and consumer advocates opposed the new rules, warning the changes will boost alternative fuels – such as biofuels made from cow manure or soy beans – that may have limited environmental upsides, and will allow oil companies to stay in business because they can buy credits or switch to producing those fuels.

Staff with the Air Resources Board initially estimated a 47-cent-per-gallon increase as early as next year although it later revised the estimation to 10 cents per gallon or no increase at all.

In October, Governor Newsom had signed a law aimed at preventing gas prices from spiking. Californians pay the highest rates at the pump in the U.S. due to taxes and environmental regulations.

The new legislation was inspired by findings from the state’s Division of Petroleum Market Oversight that showed that gas price spikes are largely caused by increases in global crude oil prices and unplanned refinery outages. The law gives energy regulators the authority to require that refineries keep a certain amount of fuel on hand. The goal is to try to keep prices from increasing suddenly when refineries go offline for maintenance. Proponents say it would save Californians billions of dollars at the pump.

Governor Newsom joined lawmakers at the state Capitol to sign the law and criticized the oil industry for its efforts to keep the legislation from passing.

“They continue to lie, and they continue to manipulate,” he said. “They have been raking in unprecedented profits because they can.”

Governor Newsom signed the measure just weeks ahead of the November election, but he said the legislation was not about politics. He has two years remaining in his second term.

Opponents of the law have said it could unintentionally raise overall gas prices and threaten the safety of workers by giving the state more oversight over refinery maintenance schedules. Some argued delaying necessary maintenance could lead to accidents.

The Trump administration in 2019 revoked California’s ability to enforce its own tailpipe emissions standards. President Joe Biden later restored the state’s authority, which was upheld in federal court.

Future challenges from the Trump administration could lead to long court battles, said David Pettit, a senior attorney with the Center for Biological Diversity’s Climate Law Institute.

“In the meantime, I think we still need something ... to enhance the development of electric vehicles and the electric vehicle infrastructure,” Pettit said. “The LCFS is a way that we might be able to do that.”