Feature: Everywhere Else, Gas Keeps Falling. Tomorrow, California Raises It.

Tomorrow, July 1, the price of gasoline in California goes up — by the state's own hand — and it is not the 2.2 cents you may have read about. That is just the excise tax, rising under the SB 1 inflation escalator from 61.2 to 63.4 cents a gallon, the highest fuel tax in the nation. Stacked on top the same day is a change to the Low Carbon Fuel Standard that the state's own analysts expect to add another 5 to 9 cents. Together, Californians wake up to a 7-to-11-cent jump in a single morning.

It arrives in the strangest possible week to be raising the price of fuel. The national average has now fallen for five straight weeks, to about $3.91 — below $4 for a second week and the lowest in months. Crude has collapsed: WTI settled at $70.34 this week and Brent slipped under $75, the lowest since the Iran war began, as the Strait of Hormuz reopens and Gulf exports rebound toward pre-war levels. Analysts just cut their 2026 oil forecasts for the first time since the war started. Drivers across the country are getting their first real break in months.

Read the two facts together, because the contrast is the whole argument.

The relief everyone else is enjoying came from a ceasefire 7,000 miles away — not from any decision in Sacramento. That is the cleanest proof yet of a point this newsletter makes every week: the things that move your gas price are crude and policy, and California controls exactly one of them. This summer the crude side fell, all the way back to pre-war levels, for reasons California had nothing to do with. And the one lever the state does hold, it pulls in the wrong direction tomorrow — twice, with the tax and the fuel standard at once.

This year, for the first time, the objection has a name and a letterhead. This week Rep. David Valadao (CA-22) led members of California's congressional delegation in a formal letter urging Governor Newsom to suspend the increase, noting that drivers already pay the most in the country. Newsom has not moved. State Sen. Tony Strickland put the underlying problem plainly: "Our gas prices are astronomically high because of taxes — and also because we lost 20% of our oil production and we rely almost exclusively on foreign oil." Other states, he noted, suspended their fuel taxes when prices climbed. California is doing the opposite, automatically, on schedule.

This is the structural California premium in its purest form. Strip out the foreign war entirely — as this summer's prices now do — and what remains is the part Sacramento builds on purpose: the taxes, the fuel-standard surcharges, and the lost production underneath them. A reopened strait lowers the barrel for everyone. It does not touch the cents California stacks on top, and it does not bring back the wells the state stopped permitting — or the investment its bonding rules keep out.

So watch the split this week. The nation's price keeps drifting down on a ceasefire nobody in California negotiated. California's price gets a 7-to-11-cent push up from levers nobody outside Sacramento voted for — landing the same weekend a record 72 million Americans, nearly 9 million of them Californians, take to the roads. When the headlines say gas is getting cheaper, that is true — just not here, and not because of anything the state did. The only thing that lowers the price of fuel is more fuel. A tax hike is the opposite of a supply plan.

Sources: The Californian, Rep. Valadao, AAA, Reuters, The Center Square

California's delegation urges Newsom to suspend the gas tax as it takes effect July 1 — Office of Rep. David Valadao
Rep. David Valadao (CA-22) led members of the state's congressional delegation in a letter pressing Governor Newsom to suspend tomorrow's gas-tax increase, arguing Californians already pay the nation's highest prices. The ask echoes what other states did this year — Georgia and others temporarily suspended fuel taxes as prices rose — and sharpens the contrast: the increase is automatic, but stopping it would take a choice Sacramento has so far declined to make.

National gas average falls a fifth straight week, holding below $4 — AAA
The national average slipped to about $3.91, its fifth consecutive weekly decline, as crude fell on the U.S.–Iran de-escalation. AAA expects a record 72.2 million Americans to travel for Independence Day, 85% of them by car. The relief is real and national — which is exactly why California's self-imposed July 1 increase stands out so starkly against it.

Oil falls below $75 to near pre-war levels as Hormuz reopens; analysts cut forecasts — Reuters
With the Strait of Hormuz reopening and Gulf crude shipments rebounding toward pre-war levels, analysts dialed down their 2026 oil-price forecasts for the first time since the Iran war began — after five straight monthly increases. WTI settled near $70 and Brent dropped under $75, the lowest since the conflict started. The single biggest variable in California's pump price has now swung fully in drivers' favor — making everything Sacramento stacks on top easier to see.

July 1's other increase: a fuel-standard change adds 5 to 9 cents — The Californian / SF Chronicle
Beyond the 2.2-cent excise-tax bump, the state's revised Low Carbon Fuel Standard is expected to raise per-gallon costs by another 5 to 9 cents starting July 1 — a cost that doesn't show up as a "tax" but lands in the same tank on the same day. Together the two levers add an estimated 7 to 11 cents, the clearest single-day example of how California's price is built by policy, not just markets.

Sable weighs California Supreme Court appeal, wins a pollution-waiver round — New York Post / Santa Barbara Independent
After an appeals court upheld the Coastal Commission's injunction, Sable Offshore signaled it may take the fight to the California Supreme Court — and separately won a five-day air-quality waiver from a county hearing examiner over emissions during restart. The company is not backing down: the battle over roughly 60,000 barrels a day of domestic California crude continues across state, federal, and regulatory fronts.

Week of June 30, 2026 — Source: AAA, EIA

California's average for regular fell again this week, down about 13 cents to $5.43, a fifth straight weekly decline. The national average dropped for a fifth week too, to about $3.91 — below $4 for a second straight week. The driver, once again, was crude, not California: WTI settled at $70.34 and Brent slipped under $75, the lowest since the Iran war began, as the Strait of Hormuz reopened and Gulf exports rebounded toward pre-war levels. Two notes for context. First, the gap holds near $1.52 a gallon — California still pays roughly 39% more than the national average, though at the pump it has actually slipped just behind Hawaii ($5.53) this week even while keeping the nation's highest fuel tax. Second, that tax — plus a Low Carbon Fuel Standard change — pushes California's price the other way starting tomorrow, an estimated combined 7 to 11 cents on July 1, precisely as the rest of the country reaches a pre-war low. (National diesel is an EIA-directional estimate; CA diesel of ~$6.56 is AAA's California average, down from $6.75 a week ago.)

Data: AAA — California, AAA — National Average Stays Below $4, The Californian, EIA Weekly Retail

The thread this brief has tracked since the spring has finally resolved — and it resolved entirely outside California. The Strait of Hormuz is reopening, Gulf crude shipments are rebounding toward pre-war levels, and analysts have cut their oil forecasts for the first time since the Iran war began. The barrel that California refines got cheaper because a foreign ceasefire held, not because the state added a single domestic source.

And the structural picture underneath is exactly where it was. California still refines about 75% imported crude. It still leans on the federal Jones Act waiver harder than any state — absorbing more than 60% of the gasoline cargoes moved under it, about 3 million barrels — and that waiver still expires mid-August, with no permanent fix behind it. The one new domestic source off its own coast, Sable's roughly 60,000 barrels a day, is still constrained by an injunction the state just defended in court. So when the external relief fades — and a waiver with a six-week clock and a ceasefire still being negotiated are not permanent — California will be standing exactly where it started: at the end of the longest import routes in the country, having added cost at home the very week the world handed it relief.

Sources: Reuters, AAA, CEC Oil Supply Sources, MARAD Waiver Report

The CA4ES Energy Brief is published weekly by Californians for Energy & Science, a 501(c)(3) nonprofit. Data-driven energy intelligence for Californians.

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