California’s Gas Prices Set for a Rise
Starting on July 1, 2026, California drivers will see their gas expenses increase again. The state’s excise tax on gasoline is slated for its annual adjustment, which is not a pleasant surprise for many.
The excise tax will go from 61.2 cents per gallon to 63.4 cents per gallon. Similarly, the tax on diesel will jump from 46.6 cents to 48.2 cents per gallon. This places California at the top in terms of fuel taxes across the United States.
This latest increase is a result of the Road Repair and Accountability Act of 2017, also known as Senate Bill 1. This legislation was meant to fund various infrastructure improvements, including highway expansions and public transit upgrades. SB 1 mandates that fuel taxes automatically adjust every July 1, depending on changes in the California Consumer Price Index.
Since its implementation, the base excise tax has more than doubled from what it was before SB 1, which stood around 27.8–30 cents per gallon.
However, this 2.2-cent increase is just a fraction of the total taxes and fees that California drivers encounter. When you factor in state and local sales taxes, the cap-and-trade program, underground storage tank fees, and the Low Carbon Fuel Standard (LCFS) among others, the overall additional cost can range between $1.15 and $1.20 or even higher per gallon, depending on market conditions.
This situation has drawn criticism from various corners, including Republican lawmakers, who are calling for a suspension of the tax increase. They argue that these rising costs weigh heavily on working-class families and small businesses, particularly during the busy summer travel season.
The “Hidden Tax” Impact
Republican legislators often emphasize that the LCFS serves as an unseen surcharge, placing an extra burden on lower and middle-income drivers.
“Families in the Central Valley are already grappling with the high cost of living in California, and an additional 71 cents per gallon every time they fill up is simply too much. It’s frustrating that California drivers pay nearly $2 more per gallon than the national average while Governor Newsom’s policies continue to push prices higher,” stated Representative David Valadao (R-Calif.).
Another representative from the California Fuels & Convenience Alliance said, “These price increases are not due to global oil market fluctuations; they are the result of policy decisions right here in Sacramento. Economists are predicting that these adjustments could raise gas prices by 65 cents per gallon or more, without any clear plan to help families or small businesses.”
State Senator Tony Strickland (R-Huntington Beach) added, “This increase is coming at a difficult economic time… Higher fuel prices can drive up everyday costs like groceries. While other states have paused gas taxes during periods of high fuel prices, California seems committed to increasing the financial burden.”
In contrast, supporters including Democratic state officials and environmental advocates argue that this structure is vital for sustaining infrastructure and advancing climate initiatives. They maintain that programs such as the LCFS will eventually lead to lower carbon fuel alternatives.
Recent data indicates that California’s average retail gasoline price hovered around $5.45 to $5.60 per gallon at the end of June 2026, which is approximately $1.50 to $1.65 higher than the national average, influenced by taxes, regulatory costs, and other market factors.
