SACRAMENTO, Calif. — California’s gas prices have a hit a five-year high, with average prices in the state reaching more than $4 per gallon, according to GasBuddy.
The state has the second highest gas tax in the country, and, according to GasBuddy Senior Petroleum Analyst Dan McTeague, taxes definitely play a factor in making prices move and appear to go much higher than analysts may have thought.
So, what actually goes into the cost of gas?
According to California Department of Energy, the average retail price of regular gas for the week of April 15 was about $3.92 per gallon and about $4.12 per gallon for midgrade.
McTeague broke down the costs like this:
- $1.50 for the crude oil ($63 per barrel divided by 42 gallons per barrel)
- $1.50 for the refined product and markup
- $.72 to $.73 for the tax
- $.20 to $.25 for the retailer
For taxes, the $.72 to $.73 can break down to:
- Federal tax - $0.184
- State tax - $0.417
- Sales tax - 2.25 percent
- Any applicable district taxes
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Why are gas prices going up in California?
While the gas tax is playing factor, gas prices are also being impacted by supply.
“In other words, we’re not producing as much gasoline as we need,” McTeague said.
“In order to get gasoline that we need, the market is raising prices,” he added.
Those prices go up because refiners need to meet commitments and, when they have a problem with production, they have to pay more and essentially ask someone else to fill their contractual gap.
Other impacts to refineries have included seasonal changes and maintenance - much like a car, a refinery has to be maintained to run at an optimum level. The other refineries that were running well ran into what McTeague described as “varying upsets,” which meant that they couldn’t produce as much gasoline during a strong point of demand.
“Bottom line is we’re short," said McTeague. "We’re short a few barrels. We’re short a few gallons. In order to get those into people’s cars to meet our demand, we have to raise prices.”
When will gas prices get better?
“There’s really no relief in sight just yet,” McTeague said.
As far gas prices in the future, McTeague said that some good news from earlier in the week wasn't good enough. Refinery output was still low.
“I’m looking to see more good news maybe next week, but I think for the foreseeable future, not only are these prices going to hold, they’re probably going to increase about 10 cents a gallon between now and next week,” he said.
Adding to the trouble is the "boutique" gasoline that California uses to meet their standards.
According to McTeague, it's more expensive to make gasoline in California than anywhere else in the country. Refineries are only allowed to produce what McTeague described as a certain type of clean "ultra difficult to make gasoline," and a lot of refineries aren't able to do that.
This is one of the reasons California gas is more expensive than other states with different standards.
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