The nationwide average price of a gallon of gasoline sits at $4.24 today. Most of the country is reeling from that high. But California drivers envy it. They’re paying an average of $5.90. A new proposal would see the state government try to ease drivers’ pain with a gas subsidy of up to $400 per vehicle.
Prices are high nationwide, thanks to Russia’s invasion of Ukraine. The price at the pump seems to have peaked on March 11, hitting $4.33. It rocketed up in the war’s earliest days and has come down extremely slowly.
Experts can’t predict when prices will decline significantly, with little progress toward ending the war. The only thing certain to lower prices is for Americans to use less gasoline – something we’ve begun to do.
Some States Have Taken Action
Governments have few options to lower the cost of gasoline. The federal government has released 30 million barrels of oil from its Strategic Petroleum Reserve – but Americans routinely use up that amount in a day and a half.
Some state governments have temporarily waived gas taxes. That has the effect of bringing pump prices down quickly – prices fell about 30 cents overnight in Maryland when that state paused its gas tax.
But California’s government is exploring another solution. Governor Gavin Newsome (D) has proposed a different answer.
Competing Rebate Proposals
Newsome’s plan would issue California residents a $400 gas card for each vehicle registered in their name, with a cap of two per person (looking at you, Jay Leno). There is no income limit to the proposal.
The plan would also pause a 3 cent increase in the state’s gas tax scheduled to take effect in July. Additional funding for public transit would help offset the rising cost of transportation for those who don’t own a car.
Two similar proposals are making their way through the state’s legislature. Each differs slightly in how it would implement the payments and who would qualify. Democrats sponsor all three plans and control the legislature and the governorship, so it seems likely they will be able to work out a compromise to bring drivers some relief.
Similar proposals have been made in legislatures in Kansas and Minnesota.
Why are California’s Gas Prices So High?
California has the nation’s second-highest gas tax, averaging 51 cents per gallon. Only Pennsylvanians pay more in gas taxes. Gas taxes in most states pay for road repairs.
But it’s a bit of a mystery why the state’s gasoline is so expensive. The Los Angeles Times notes that, even after all taxes and fees are removed, “there is an approximately 30-cent difference between the Golden State and the national average that analysts can’t seem to account for. One economist calls this a ‘mystery surcharge,’ and the California Energy Commission said it’s due to higher profit-taking by the oil industry.”
