San Francisco, CA

Why Are San Francisco Gas Prices Getting So Expensive?

Jano le Roux

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Oil prices in San Francisco have risen to as much as $4.30 per gallon. Oil prices have risen as a result of increased trade and better economic conditions. A big container ship that was blocking the Suez Canal could be the reason for the price of a variety of commodities, including oil.

More citizens are driving now that coronavirus rules have been relaxed, which has increased demand and driven up prices. The AAA auto club’s national average scores are stronger than they have been since May 2019, but there is no obvious explanation for this.

Fuel prices in California are much higher than in other countries. According to an observer, the difference is largely attributable to higher taxes and environmental fees. Since 2015, Californians also charged an estimated 25 to 30 cents a gallon for a “mystery gasoline surcharge” The surcharge would save Californians an additional $4 billion in gasoline premiums per year.

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4:30 is a welcoming indication that the workday is coming to an end for many citizens. However, $4.30 for a gallon of petrol at several San Francisco stations this week is enough to make you do a double-take, and it poses the question: Why are gas rates so big right now?

As the Bay Region and the rest of the world steadily thaw from their pandemic-induced hibernation, petrol prices have risen as more trade and improved conditions have raised demand, whereas oil prices have risen. This week, San Francisco, Santa Clara, and Marin counties were transferred to the least stringent orange category. The other factor they have in common is petrol rates that are at or above $4 per gallon.

This is a buck more than the national average. And it depends on who you question that it is.

Any business analysts believe that the increased cost of fuel in California is attributed to statewide petrol and carbon dioxide taxes and legislation. According to the New York Times, state agencies and consumer activists insist that certain causes are just partially to blame and that the biggest producers charge more in California merely because they can, although major oil firms have held off on ramping up production despite experiencing massive declines in income and workers owing to the pandemic last year.

Blocking the Suez Canal with a large container ship could raise the price of a number of commodities, including oil.

What is undeniable is that petrol rates have risen steadily since the beginning of the year, but they have just leveled off. The AAA auto club’s national average rates are higher than they have been since May 2019. However, there is no clear explanation for why they are higher.

After the beginning of the year, crude oil rates have risen. A barrel of oil has risen from less than $50 at the start of the year to about $65 now, according to the California Energy Commission.

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According to an email from CEC spokeswoman Lindsay Buckley, this adds about 38 cents a gallon to petrol rates and accounts for about 60% of price increases for customers in the United States and California.

As coronavirus regulations have been relaxed, more people are driving, which has boosted demand and pushed up costs, according to Buckley.

Drivers haven’t recovered to pre-pandemic commute speeds, according to CEC tracking of Bay Area bridge traffic, but car travel in the region increased by more than 20% between January and March. “It’s likely that the recent increase in driving is linked to more vaccinations and the ongoing economic recovery,” Buckley said.

So, why are rates in California so much higher than elsewhere?

According to Mr. A Borenstein, a UC Berkeley energy economist, “the overall differential is due largely to higher taxes and environmental fees like cap and trade and the low carbon fuel standard” in California.

Also when accounting for the higher taxes, Borenstein says that Californians have been paying an additional 25 to 30 cents a gallon since 2015, which he refers to as the “mystery gasoline surcharge.”

According to Borenstein, this translates to an additional $4 billion in petrol prices for California citizens per year. According to him, the price increase began in 2015 after a fire at a Southern California refinery slashed production, but it never subsided.

The extra 30 cents per gallon tax was also reported in a 2019 study by the California Energy Commission, which concluded, “The primary cause of the residual price increase is simply that California’s retail gasoline outlets charge higher prices than those in other states.”

Californians pay some of the nation’s largest petrol taxes. In a January survey, the American Petroleum Institute lobbyist organization found that Californians charged more than 80 cents per gallon in taxes, the most of any state, owing primarily to a state excise tax. According to CEC numbers, those taxes will be a few pennies lower per gallon.

High gas prices are no surprise to some analysts, such as Patrick De Haan, head of petroleum analysis at GasBuddy.

According to the API, Pennsylvania was second on the chart, with a gallon price of 77 cents.

High gas prices disproportionately affect those who can least afford them, according to the Urban Institute. Higher fuel prices are directly attributable to the state’s Low Carbon Fuel Standard, cap-and-trade system to limit emissions, and taxes at the pump. California Department of Justice is investigating unfair and anti-competitive practices in the state’s oil industry. 

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