California Gas Prices May Exceed $8 by 2026, Report Warns

Gas prices in California could rise significantly, potentially reaching over $8 per gallon by the end of 2026, according to a new report. The report, authored by USC Professor Michael Mische, highlights the impact of upcoming refinery closures, which could reduce the state's refining capacity by nearly 21%. The Phillips 66 refinery in Los Angeles and the Valero refinery in Northern California are slated for closure, representing a substantial decrease in the state's gasoline production capacity.

California currently consumes more than 13.1 million gallons of gasoline daily, but with the state producing just under 24% of its crude needs, the loss of refining capacity could create a deficit of 6.6 million to 13.1 million gallons per day. This shortfall could lead to a 75% increase in gas prices, with projections indicating prices could rise from $4.816 to between $7.348 and $8.435 per gallon by the end of 2026.

Some lawmakers are voicing concerns about the potential economic impact of these closures. Senate Minority Leader Brian W. Jones (R-San Diego) has urged Governor Gavin Newsom to intervene and prevent the refinery closures. "If the Governor doesn’t act now, Californians will be blindsided by sticker shock at the pump and skyrocketing prices on everyday goods," Jones stated.

The closures could also result in significant job losses, affecting approximately 1,300 direct employees and indirectly impacting nearly 3,000 jobs statewide. Jones has criticized Governor Newsom's policies, arguing that they have made it difficult for refineries to remain operational due to excessive regulations and financial burdens.

As California continues to expand its electric vehicle infrastructure, with more EV chargers now than gas nozzles, the state is rethinking its gas tax strategy. However, the immediate concern remains the potential for skyrocketing gas prices and the broader economic implications for Californians. Lawmakers are urging the governor to work with fuel producers to find solutions, such as investment tax credits and relief from certain taxes and regulations, to prevent the closures and ensure long-term energy stability.