There Is No “Mystery” in California’s Gas Prices; The State Created This Crisis

Last month, the California Division of Petroleum Market Oversight released its long-awaited report on the so-called “mystery surcharge” at the pump. But after several eye rolls from legislators and frustration that dominated the budget hearing, where lawmakers demanded answers, the report arrived with the same conclusion Californians have heard for years: prices in California are much higher than the rest of the country, and no one can quite explain why.

Except we actually can. And it is not a mystery.

What the report doesn't explicitly say is the same truth Californians feel every time they fill up. The state has been working for years to make it harder, more costly, and in some cases impossible for refiners and producers to stay in business. The surcharge isn't a secret plan. It reflects the cost of a hostile business climate layered on top of a shrinking refining industry.

The report recognizes the obvious: higher labor, energy, and regulatory costs, along with special gasoline formulations, all contribute to the price gap.

But here is what is missing from the report. Every imported barrel of oil California relies on comes with a $5 to $7 shipping surcharge. The only reason we rely on imports is that the state made producing energy inside its borders politically toxic.

When Oklahoma drivers pay an average of $2.56 per gallon, and Californians pay $4.60 to $4.70, the explanation is not mysterious. It is the layers of policies that California has piled on for decades.

Consider what has happened.

These layers of oversight cost money. Lawsuits also cost money. Forced delays add to expenses. The inability to expand or repair facilities results in costs. The persistent fear of shutdowns or legislation causes market instability, which can be referred to as part of the “mystery surcharge.”

Industry experts told The Center Square that “there is no mystery surcharge. It is a policy-driven premium.” California’s unique fuel blend, its lack of pipelines to the rest of the country, and the regulatory pressure that has pushed refiners to the brink all feed into the same outcome: higher prices for families with no alternative.

Meanwhile, the state points fingers, holds hearings, creates new agencies, demands more reports, and blames companies that are barely hanging on.

None of that is in the official report.