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Bad news if you’re planning a road trip this summer.
Gas prices at California pumps could jump in July. This encourages the creation of low-carbon fuels as a result of state sales tax hikes and stricter regulations on refineries. The total rise could raise gas prices by nearly 70 cents, but industry experts say they can’t estimate the exact price of gallons next month.
According to American Auto ASSN, Californians and drivers across the country typically have a surge in fuel prices in June, but the oil supply market is currently outperforming slightly lower prices compared to 2024.
As of Wednesday, the state’s current average was $4.64 per gallon, a 17-cent drop compared to $4.81 on the same day last year.
Forecasters predict that global oil inventories will rise in the next five months, which will ease pressure on oil prices, but California consumers do not feel the continued reprieve that they expect next month.
On July 1, California’s gas and diesel excise taxes will increase to 61.2 cents per gallon from the current tax rate of 59.6 cents per gallon, according to the California Department of Taxation. Diesel fuel also increases to 45.4-46.6 cents per gallon.
The state adjusts its fuel tax rates annually based on Treasury data, and the new tax rate comes into effect on July 1st each year.
This isn’t the only factor that will raise gas prices this summer.
In 2024, the California Air Resources Commission approved an amendment to the state’s low carbon fuel standards program, which was established in 2011 with two goals in mind. It will move states’ fuel dependence to low-carbon fuels and help the state achieve its target of reducing fuel usage by 49% by 2045.
The approved amendments aim to encourage the value of low-carbon fuels and impose stricter restrictions on carbon-strength fuels, so gasoline producers are encouraged to create less contaminating fuels.
However, any additional costs for compliance with the new regulations will be passed to the pump driver.
Last year, CARB estimated that the revision could raise gasoline prices by 47 cents per gallon, or $6.4 billion a year. A few months later, the agency returned the estimate and said it would not provide the revised one to the public.
The agency previously told The Times that “what we don’t do is analyse what the effect will be on retail gas prices,” so the new figures won’t get close, instead analyzing economic growth, job creation and public health.
Danny Cullenward, vice-chairman of California’s Independent Emissions Market Advisory Committee, estimated that the short-term impact from the gas price program revision could be 65 cents per gallon this year, $0.85 per gallon by 2030 and nearly $1.50 per gallon by 2035.
The AAA said there is no estimate yet on how the revisions to the low carbon fuel standards program will affect gas prices “particularly due to recent declines in oil prices.”
“If they remain low, the impact could be small,” said Gianella Ghiglino, a spokesman for the AAA in Southern California.
Drivers can’t avoid price hikes at California pumps, but there are ways to find gas stations at the cheapest prices.
How to find cheap gas near you
There are several apps and websites that will help you find low prices near your travel route.
The Auto Club app for AAA members shows you the closest gas stations charging lowest prices anywhere in the US. The ITS app and its website Gasbuddy will show you real-time pump prices near you. The Gas Teacher app allows you to search for gas stations by price, fuel grade and distance.
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