California Gasoline Prices Soar, Approaching $5 as Middle East Tensions and Refinery Closures Bite

California drivers are facing a significant increase in gasoline prices, with the statewide average reaching $4.905 per gallon as of March 6, 2026, according to the American Automobile Association (AAA).¹ Prices in key metropolitan areas like Los Angeles and the San Francisco Bay Area are even higher, and experts warn that costs could exceed $5 per gallon in several regions.

Regional Impact of Rising Prices

In Los Angeles, gasoline prices have risen by 50 cents in recent days, nearing $5 per gallon.¹ The San Francisco Bay Area is particularly vulnerable due to the planned closure of the Valero refinery in Benicia by April 2026, which threatens to reduce local supply and exacerbate already high costs.^{1, 2}

Areas in the Central Valley, such as Fresno and Bakersfield, are similarly experiencing price pressures due to refinery maintenance and reliance on imports.¹ Sacramento and the northern part of the state have seen a 29-cent increase in the last month, primarily attributed to the seasonal switch to a more expensive summer gasoline blend designed to reduce emissions.¹

Key Factors Driving Price Increases

Several factors are contributing to the surge in gasoline prices. Attacks in the Middle East have driven up the price of crude oil globally, directly impacting California, which is a net importer of oil.¹ Experts at GasBuddy predict further increases of at least 20 cents per gallon due to disruptions in oil transportation.¹

The transition to summer-blend gasoline, which is formulated to reduce evaporation and contamination, also adds to the cost, as does ongoing refinery maintenance.¹ The planned closures of the Phillips 66 refinery in Wilmington (complete of 2025) and the Valero refinery in Benicia (April 2026) will reduce the state’s refining capacity by 17%.¹ A study by the University of California, Davis, estimates that these closures could raise prices by up to $1.21 per gallon by August 2026.¹

State Policies and Environmental Regulations

California’s stricter environmental regulations and taxes also contribute to higher gasoline prices. The state’s gasoline tax will increase by 1.6 cents per gallon in July 2025, and updates to the Low Carbon Fuel Standard (LCFS) could add 5 to 8 cents per gallon.¹

The Governor’s Office defends these measures, stating that the LCFS reduces fuel costs per mile by 42% over the long term, saving more than $20 billion annually by 2045.¹ However, groups like the California Fuels & Convenience Alliance argue that these policies drive closures and contribute to high prices.¹ Chevron has previously warned that climate regulations could force it to leave the state, though no recent statements have been made regarding current prices.¹

Historical Context and Future Outlook

California has historically maintained the highest gasoline prices in the country, averaging $1.50 above the national average, due to its unique reformulated gasoline blend and lack of interstate pipelines.¹ While national prices fell by 21 cents in 2025, California experienced increases due to local factors.¹

Analysts project potentially extreme scenarios, with some estimating prices could reach as high as $8.43 per gallon if refinery closures are not addressed.¹ However, the Governor’s Office disputes immediate increases of 65 cents, stating there is no correlation between LCFS credits and gasoline prices.¹

Sources:

1. ABC7 News
2. Yahoo News