California’s Sky-High Gas Prices Show No Signs of Slowing

California motorists will need to brace themselves –  gas prices are predicted to climb again in the coming months, as summer nears and geopolitical tensions increase.

Gas Troubles

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Despite gas prices soaring in California in the last month alone, motorists in the Golden State and throughout the country may be hit with more price increases in the coming months.

Californians Struggle With Prices

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While the cost of gas has become a pain point for individuals and families across the US, it is a particularly sensitive subject for Californians, who currently pay more for gas than any other state, according to data from the American Automobile Association.

Far Above the National Average

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With an average price of $5.43 per gallon as of Tuesday, Californians are paying $1.64 more per gallon than the national average. 

March Madness

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While gas prices have been on the rise across the world since the beginning of the Russia-Ukraine war in early 2022, the last month has been a particular cause for alarm.

6.5% Increases in One Month

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Americans saw average gas prices shoot up by 6.5% in the last month alone. And those price increases are expected to continue.

Major Drivers

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This is due to both the changing of the seasons from winter to spring and summer, and to increasing international tensions involving global powers like Russia and Iran. 

Changing of the Seasons

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First, seasonal changes: typically gas prices increase across the nation between February and March each year, which explains why drivers experienced such a significant increase last month. Particularly California, which saw prices rise by 47 cents per gallon in a single month.

Making the Switch

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“Gas prices move higher in the spring and summer every year. The nation makes the switch from cheaper winter blend gas to summer starting in March and April,” said AAA spokesperson Andrew Gross.

More Driving, More Demand

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“The better weather and longer days usually lead to more driving, pushing demand up,” Gross further explained.

More Noticeable Than Ever

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In the past, these prices may not have been as concerning for drivers. But paired with price increases across the board, it makes an enormous difference for the average American, especially when recent years have seen the spring/summer increase go as high as 71 cents per gallon.

Geopolitical Concerns

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But geopolitical concerns in the Middle East and Europe may be set to drive those prices even higher. 

Tension Reflected in Global Markets

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In particular, the ongoing Russian-Ukraine war and escalating tensions between Iran and Israel will likely be reflected in global markets, causing gas prices to either increase or remain stagnant, where they might otherwise have lowered.

Political Risks Go Up

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Prices “should normally go down but we see geopolitical risks going up at times,” said Gokce Soydemi, business economics professor at California State University. 

Higher Tensions, Higher Prices

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“With potential involvement of other countries in the Middle East and Ukraine regional conflicts[…] this gets reflected in terms of higher prices at the gas pump.” he continued. 

Middle East Tension Causes 20% Increase

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While the war between Russia and Ukraine was initially the biggest driver behind soaring gas prices, tension in the Middle East has driven up US oil prices by 20% in the last year.

More Elements Involved

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Other elements have also had a compounded effect on gas prices in California, and may continue to cause gas increases regardless of international market issues. 

Refinery Maintenance

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Another major issue is “planned and unplanned refinery maintenance [that] has caused supply issues” according to a spokesperson for the Automobile Club of Southern California.

Finding Substitute Suppliers

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A Washington state refinery has planned maintenance that is likely to last for several weeks. As a major supplier for Southern California, it will take some time to find substitute suppliers that provide the unique type of emissions-reducing gasoline blend that California drivers require.

Several Weeks of Delays

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Refinery shutdowns mean that “replacement supplies of (California gasoline) come in by marine tanker from out-of-state U.S. refineries or from other countries. It can take several weeks to find and bring replacement motor gasoline from overseas that meets California’s unique specifications,” according to the federal Energy Information Administration.

Won’t Reach Record Highs

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Thankfully, current gas prices in California are nowhere near the record-high $6.44 per gallon that the state saw in June 2022. Experts believe that there is no indication it will reach that price again this year.

The post Why California Gas Prices Refuse to Drop first appeared on Pulse365.

Featured Image Credit: Shutterstock / Kim Britten.

The content of this article is for informational purposes only and does not constitute or replace professional financial advice.

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