Imminent $8 Gas Prices Likely in a Democratic State, Sparking Concern Across the Political Spectrum for 2023
Professor Michael Mische, from the University of Southern California, has shed light on the factors driving up gas prices in California. Unlike the commonly held belief that oil companies are overcharging consumers, Mische's study indicates that policies related to gas taxes and refineries are the primary culprits.
Wracking his brain over why Californians might pay as much as $8.43 per gallon of gas next year, Mische points to the planned shuttering of two refineries within the state. The Phillips 66 refinery in LA and Valero's Benicia refinery in Northern California could be on the verge of closure, leading to a likely decrease in oil production and subsequent price increases in the Golden State, possibly impacting neighboring states as well.
"Any disruptions to oil and foreign gasoline supplies will exacerbate California's gasoline dilemma and drive up prices," Mische warns.
The Struggling Film Industry in LA
Meanwhile, LA grapples with a continuing decline in film and television production, evident by the soaring gas prices already nudging $8 a gallon in some areas.
Democratic Governor Gavin Newsom's press office dismissed Mische's study as "unsourced," claiming they are making efforts to avoid production issues. However, the research has garnered bipartisan concern, with former Los Angeles Mayor Antonio Villaraigosa, a Democratic gubernatorial candidate, voicing his concern.
"We can meet our climate goals, but we can't do it all on the backs of Californians already struggling with high costs and the highest gas prices in the nation," he stated.
Republican legislators have been especially critical of Newsom's policies, with lawmakers calling them a root cause of the potential price hikes. Assembly Minority Leader James Gallagher bluntly summed up the sentiment, "Californians are paying the price for Gavin Newsom's failed policies."
The Role of Regulations and Their Impact on Refineries
While Mische's study focused on the shutdown of two specific refineries, it highlighted the broader issue of regulations affecting refinery operations and, consequently, gas prices. Specifically, policies like SBX1-2, ABX2-1, and recent changes to the Low Carbon Fuel Standard are putting pressure on operations and potentially causing refineries to close, thus escalating gas prices.
The closure of these refineries will undeniably affect not only the jobs of the approximately 1,300 workers directly employed but could also lead to a broader economic impact, potentially affecting up to 3,000 jobs statewide due to the industry's job multiplier.
While the direct impact of these closures is primarily on California, neighboring states like Nevada and Arizona could also feel the effects due to the interconnected nature of regional fuel markets, although the specific impact on these states has not been detailed in Mische's analysis.
In essence, the closure of these refineries poses significant challenges for California's fuel industry, potentially leading to higher gas prices and reduced production capacities. The situation underscores the need for strategic planning and regulatory adjustments to mitigate these effects.
[1] U.S. Energy Information Administration, "California Gasoline Refining and Wholesale Marketing Markets – Monthly Update" (January 2025)[2] Mische, Michael, "The Impact of Refinery Closures on Gasoline Prices in California: An Analysis" (2025)[3] California Air Resources Board, "The Low Carbon Fuel Standard – Frequently Asked Questions" (Last Modified: July 2024)[4] California Independent Petroleum Association, "California Refineries in Crisis: A Study of the State's Regulatory Challenges" (April 2025)
- The high gas prices in California, reaching as much as $8.43 per gallon next year, have been linked to the planned shuttering of refineries by Michael Mische, a professor from the University of Southern California.
- Governor Gavin Newsom's office has dismissed Mische's study as "unsourced," but the research has garnered concern from both political parties, with former Los Angeles Mayor Antonio Villaraigosa voicing his concern about the impact on ordinary Californians.
- The closure of the Phillips 66 refinery in LA and Valero's Benicia refinery in Northern California could lead to a decrease in oil production, causing further price increases and potentially impacting neighboring states.
- The study by Michael Mische also underscores the broader issue of regulations affecting refinery operations and, consequently, gas prices, citing policies like SBX1-2, ABX2-1, and changes to the Low Carbon Fuel Standard as potential causes of refinery closures.
- The closure of these refineries could have a significant impact on California's economy, potentially affecting jobs for up to 3,000 workers, as well as the interconnected fuel markets in neighboring states like Nevada and Arizona.
- The escalating gas prices could be particularly harmful to struggling industries in California, such as the film industry in LA, and highlights the need for strategic planning and regulatory adjustments to mitigate these effects.
