California Gas Prices to Go Up July 1: What to Know

Newsweek

26-06-2025

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
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California drivers will see higher gas prices starting July 1, as two state policies take effect.
First, the state's gas excise tax will increase from 59.6 cents to 61.2 cents per gallon, part of an annual adjustment for inflation.
At the same time, the California Air Resources Board (CARB) is rolling out stricter rules under its Low-Carbon Fuel Standard (LCFS), which requires fuel producers to cut the carbon emissions from their products more sharply than before. The 2025 benchmark requires a 22.75 percent cut in carbon intensity from 2010 levels—a sharp increase from the previous goal of 20 percent by 2030.
To meet these targets, companies will need to blend in more expensive clean fuels or buy emissions credits—costs that are expected to be passed on to drivers.
Meanwhile, two major refineries, Phillips 66 in Los Angeles and Valero in Benicia, announced they will close by the end of 2026. The closures will reduce the number of gasoline producers in the state from nine to seven, which could trigger a sharp spike in fuel prices, based on analysis by University of Southern California Professor Michael Mische. His projections indicate gas could hit $6.43 per gallon after the first closure and soar to $8.43 once both refineries are offline, with even higher prices possible under volatile market conditions.
Together, these changes could raise gas prices by as much as 6 to 10 cents per gallon. But some experts warn the increase could be even higher.
Why It Matters
Retail prices for regular grade gasoline in California are already consistently higher than in any other state in the continental United States, often exceeding the national average by more than a dollar per gallon.
Therefore, a dramatic surge in gas prices could deepen California's cost-of-living crisis, strain working families, and reverberate through the broader economy.
Gasoline prices above 6.00 dollars a gallon are shown at a gas station in Los Angeles on Tuesday, June 7, 2022.
Gasoline prices above 6.00 dollars a gallon are shown at a gas station in Los Angeles on Tuesday, June 7, 2022.
Richard Vogel/AP
What To Know
A University of Pennsylvania report projected that changes to California's Low Carbon Fuel Standard (LCFS) could raise gas prices by 65 cents per gallon in the near term and 85 cents by 2030.
In response, Senate Minority Leader Brian Jones launched a Change.org petition urging lawmakers to repeal what he called an "unaffordable 65 cent gas price hike," arguing, "Californians already face the highest gas prices in the country." As of Thursday morning, the petition has more than 29,000 signatures — 21,000 short of its target.
However, the California Air Resources Board (CARB) disputed the 65 cent figure, calling it "misinformation." A spokesperson said prices may rise only 5 to 8 cents and that any increase would come from oil companies deciding how much compliance costs to pass on. Governor Newsom's office echoed that, calling the higher estimate false and emphasizing the LCFS could actually reduce fuel costs per mile by 42 percent by 2045.
Studies back this up. Research from the University of Minnesota and Biofuels Digest found little connection between LCFS credit prices and retail gasoline prices. In fact, California's gas price gap with the national average remained steady before and after the LCFS was introduced.
Jones rejected those claims, calling them "hogwash," telling Newsweek, "I'm really not too concerned about whether it's 10 cents or 65 cents. Basically we're splitting hairs at that point in time. It probably is in between somewhere. The bottom line is, these regulations are going to cause the price of gasoline to increase."
He also accused Newsom's office of trying to walk back an earlier CARB estimate of a 47 cent increase, saying, "They originally came out with 47 cents... and then they had to walk that back."
CARB did initially project a 47 cent increase for 2025, but later clarified that the analysis was not meant as a direct pump price forecast. Meanwhile, Democrats in the state Senate unanimously voted down a bill from Jones to pause the LCFS changes, which he claimed was part of Newsom's broader effort to phase out gas vehicles in favor of EVs.
"I believe Newsom's goal is to push Californians into EVs under the ideological guise that he's saving the planet," Jones said.
Newsom's office defended the policy on environmental grounds, noting that transportation accounts for over half of the state's carbon emissions and nearly all of its toxic diesel pollution. "This is the most impactful step our state can take to fight climate change," Newsom said in 2023, arguing that car emissions worsen asthma, wildfires, and sea-level rise.
But Jones dismissed such arguments. "California has done a very good job over the last 20 to 30 years cleaning up our air," he said, adding that the state's emissions make up just "about 1 percent of global emissions," and eliminating all internal combustion engines "would have zero impact on the rest of the planet."
Meanwhile, California gas prices remain high. In April, the state's average price per gallon was $4.85—$1.69 higher than the national average. Prices have spiked above $6 twice in the past two years, sparking public backlash and new legislation.
What Happens Next
The updated Low Carbon Fuel Standard (LCFS) regulations were resubmitted to the Office of Administrative Law on May 16, after being rejected in February. The office has until June 30 to issue a final decision, and if approved, the changes could take effect as soon as July 1.