California drivers face a devastating $8.43 per gallon gas price by the end of 2026 as Democrats push through a massive 50-65 cent tax increase while simultaneously allowing critical refineries to close.
Key Takeaways
- California’s gas tax will increase by 50-65 cents per gallon starting July 1, 2025, under the Democrat-backed Low Carbon Fuel Standard.
- Two major refineries (Phillips 66 in Los Angeles and Valero in Benicia) are set to close by 2026, eliminating 20% of California’s gasoline production capacity.
- Gas prices could skyrocket 75% to $8.43 per gallon by the end of 2026, according to USC Professor Michael Mische’s analysis.
- Republican efforts to stop the tax increase through Assembly Bill 12 and Senate Bill 2 were defeated by Democrat supermajorities in both chambers.
- The refinery closures will eliminate 1,300 direct jobs and nearly 3,000 indirect jobs while creating a daily gasoline deficit of up to 13.1 million gallons.
Democrats Push Through Massive Gas Tax Increase Despite Price Crisis
California’s Democratic supermajority has approved a crippling gas tax increase of 50 to 65 cents per gallon set to take effect July 1, 2025. The tax hike comes through the updated Low Carbon Fuel Standard (LCFS) directed by the California Air Resources Board (CARB). Republican lawmakers attempted to block this massive increase through Assembly Bill 12, which was defeated in an 18-39 vote, and Senate Bill 2, which was killed by a 10-23 vote with Democrats unanimously opposing relief for drivers. This new tax increase comes on top of California’s already highest-in-the-nation gas prices, currently averaging $4.78 per gallon.
Senate Minority Leader Brian Jones forced a floor vote to repeal the tax increase, highlighting CARB’s reckless disregard for economic impacts. The California Department of Tax and Fee Administration has already announced that the state’s gas excise tax will rise to 61.2 cents per gallon on July 1, 2025, compounding the pain for California drivers. CARB Chair Liane Randolph admitted during hearings that the board never considered how their regulations would affect gas prices, showing complete disregard for California families struggling with inflation.
Refinery Closures Creating a Perfect Storm for Price Spikes
Compounding the tax increase crisis, two major California refineries are set to shut down operations. The Phillips 66 refinery in Los Angeles will close by the end of 2025, followed by the Valero refinery in Benicia in April 2026. These facilities currently produce approximately 20% of California’s gasoline supply, and their closure will create a massive daily deficit of between 6.6 million and 13.1 million gallons of gasoline. This supply shortage, combined with California’s specialized fuel requirements that limit import options, creates a perfect storm for unprecedented price increases.
“If the Governor doesn’t act now, Californians will be blindsided by sticker shock at the pump and skyrocketing prices on everyday goods,” Said Leader Jones, California Senate Republican Leader
The refinery closures will eliminate 1,300 direct jobs and impact nearly 3,000 more positions indirectly. Senate Minority Leader Jones has warned that Governor Newsom’s anti-energy policies have created this crisis by making it nearly impossible for refineries to remain operational in California. The closures will force California to rely more heavily on out-of-state and foreign fuel sources, creating potential supply chain vulnerabilities and national security concerns.
Economic Analysis Predicts Devastating $8.43 Per Gallon Gas
USC Professor Michael Mische’s comprehensive analysis paints a grim picture of California’s energy future. His study concludes that the combined effects of refinery closures, the new low-carbon fuel standard, increased excise taxes, and other Democrat-backed climate initiatives could drive regular gasoline prices up by 75% to between $7.35 and $8.43 per gallon by the end of 2026. This massive increase would devastate family budgets and ripple through the entire economy, affecting everything from food delivery to healthcare costs.
“Based on current demand and consumption assumptions and estimates, the combined consequences of the 2025 Phillips 66 refinery closure and the April 2026 Valero refinery closure, together with the potential impact of legislative actions such as, but not limited to, the new low-carbon fuel standard, increase in excise taxes, Cap and Trade, SBX1-2, and ABX2-1, the estimated average consumer price of regular gasoline could potentially increase by as much as 75% from the April 23, 2025, price of $4.816 to $7.348 to $8.435 a gallon by calendar-year end 2026,” Said Michael A. Mische, USC Professor
Senate Republicans have vowed to continue fighting against these reckless price hikes. “We’re talking about gas prices over $8.43 per gallon by the end of next year,”.”Let’s be clear: Newsom owns this gas crisis. His policies have made it nearly impossible for California refineries to stay open. As Newsom eyes the White House, America should be watching closely: the crisis he created here could be the next national nightmare.” The massive fuel supply reduction will impact multiple industries, creating a ripple effect through the California economy that could push many businesses and families to breaking point.
