California’s gas prices could hit $8 gallon, more states could follow

Hold onto your wallets—California’s gas prices are on track to hit a jaw-dropping $8.44 per gallon by the end of 2026, and experts warn the financial aftershocks could slam Western states too. With two major refineries set to close and a tangle of new state regulations driving up costs, the Golden State’s gas crisis isn’t just a local headache—it’s shaping up to be a regional economic earthquake. The specter of $8 gasoline is enough to make a trip back East look downright inexpensive.

Now nearly $5… $8 gasoline could happen

The highest gas prices in the country are out West. California hits the top of the gauge with an average price per gallon of $4.78 as of Tuesday, May 6. But a new analysis says you ain’t seen nothin’ yet. With the shutdown of two of the state’s refineries in the offing, the findings point to the possibility of pump prices hitting $8.44 by the end of next year. But state lines won’t stop the pump pain—neighbors Nevada and Arizona may feel the big bite, too.

A study released by the University of Southern California took a look at the Golden State’s history of gas prices, its supply of oil, and the capacity of state refineries. It factored in the potential impact of closing two refineries (representing 20% of the state’s refining capacity), and took in the cost of fees and regulations. In the end, this study says $8 gasoline is likely.

Study results aren’t pretty

The results, say Professor Michael A. Mische, the study’s author, aren’t pretty. Mische was quoted by California news service, The Center Square. “The shutdown of the two California-based refineries could possibly place the Golden State in a precarious economic situation and create a gasoline deficit potentially ranging from 6.6 million to 13.1 million gallons a day, as defined by the shortfall between consumption and production,” wrote Mische.

“Reductions in fuel supplies of this magnitude will resonate throughout multiple supply chains affecting production, costs, and prices across many industries such as air travel, food delivery, agricultural production, manufacturing, electrical power generation, distribution, groceries and healthcare.”

“Based on current demand and consumption assumptions and estimates, the combined consequences of the 2025 Phillips 66 refinery closure and the April 2026 Valero refinery closure, together with the potential impact of legislative actions such as, but not limited to, the new LCFS standard, increase in excise taxes, Cap and Trade, SBX1-2, and ABX2-1, the estimated average consumer price of regular gasoline could potentially increase by as much as 75% from the April 23, 2025, price of $4.816 to $7.348 to $8.435 a gallon by calendar year end 2026,” continued Mische.

What makes California gas so expensive?

Mische said the big gap between California gas prices and prices in other states is mostly because of California’s extra taxes, fees, and rules. These policies have cut local oil production and refining much faster than people’s demand for gasoline has gone down.

“Over the last 30 to 50 years, the California state excise tax on gasoline has increased by 253%, the number of motor vehicles has grown by 38%, and our population has increased by 24%,” Mische wrote. “Meanwhile, the number of refineries has declined by 56%, in-state oil field production has fallen by 63%, finished gasoline stocks have declined by 98%, in-state daily refinery capacity has decreased by 36%, average gasoline prices for all formulations have gone up by 253%, and imports of non-U.S. foreign oil increased 712%.”

In the mix for potential $8 gasoline is the state’s new Low Carbon Fuel Standard. It requires fuel producers that crank out products that are “more carbon-intensive” to buy fuel credits from producers that sell less carbon-intensive fuel. The state’s government says the standard will crank up fuel costs by $162 billion running through 2046.

California gas prices could hit other states, too

But California isn’t the only state that is staring down the pipe at huge fuel cost increases. Two recent California bills have stirred up both Republicans and Democrats alike. Senate Bill X1-2 puts a cap on how much profit oil refiners can make, and Assembly Bill X2-1 gives California the power to set minimum fuel storage levels and decide when refineries are allowed to shut down for important maintenance. They both passed last year.

Oil producer Chevron, along with the governors of Arizona and Nevada (one Democrat, one Republican), warned that these new laws could lead to fuel shortages and drive up gas prices across the Western U.S., since parts of Arizona and Nevada depend on fuel from California refineries. $8 gasoline could become a Western reality.

Gas prices did jump across the region in February when California regulators blocked a refinery from making needed repairs for nearly two weeks after a fire, right as the refinery was preparing to shut down for maintenance.

Will $8 gasoline become a reality? While the study is but one study, it is enough to raise concern for RVers wanting to travel the Western states.

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• For more stories on California gas prices, click here. 

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