By Justin HAGER

The good news: gas prices across the country, including here in California, are finally beginning to come down, if ever so slightly. The bad news: California gas not only continues to be more expensive than the rest of the nation but is also coming down in price much more slowly.

According to AAA, the average cost of a gallon of regular unleaded gasoline in California, as of Wednesday, is $5.823, nearly nine cents lower than one week ago and nearly 10 cents lower than the record high of $5.919 recorded on March 29, 2022. In Los Angeles County, prices are even higher than the state average with a gallon of regular unleaded in the county currently averaging $5.94, 13 cents lower than the record $6.07 recorded on March 28. Meanwhile, nationwide, the average price of regular unleaded is down to $4.164, nearly 17 cents lower than the March 11 peak of $4.331.

The price of gas is influenced by a variety of different factors (none of which is the President of the United States, regardless of which political party they may be affiliated with), including (1) crude oil prices, (2) distribution costs (3) refining costs, (4) taxes and (5) shifts in supply and demand.

The base price of crude is outside of the control of California and, in many cases, even outside federal lawmakers. Russia’s invasion of Ukraine, instability in the government of Kuwait (Kuwait’s government has collectively resigned for the third time in the past 18 months) and the opportunistic market-manipulation policies of oil producing cartels, such as the Organization of the Petroleum Exporting Countries (OPEC), have all led to recent dramatic increases in the base price of crude oil.

Refining and distribution costs have also increased due to external factors after the failure of Texas’ power grid last winter caused severe damage to Texas production, refining and distribution centers – damage that has yet to be fully repaired. All of these external factors have been coupled with the nation’s recovery from the COVID-19 pandemic, leading to rapid and dramatic increases in demand for gasoline.

For its part, California prices tend to be higher than the rest of the country because of refining costs and taxes. California’s increased standards for clean air require a cleaner blend of fuel and higher state and local taxes also add to the price at the pump. According to Severin Borenstein, an energy economist at UC Berkeley who researches gas prices, the additional taxes, fees and production costs of meeting California’s cleaner fuel formula adds between 10 and 93 cents per gallon compared to the average gasoline taxes of other parts of the country, depending on the base cost and specific local tax rates.

However, those differences in taxation and clean air standards do not explain why the price of gasoline in California has, since 2015, averaged 30 cents higher than the rest of the country – even after accounting for prices that include increased taxes and clean air standards. Borenstein refers to this as the Mystery Gasoline Surcharge (MGS), and it looks something like this: Based on prices from March 29, 2022, increased California taxes, fees and CARB standards explain a $0.93 price differential between California and the national average. The actual price differential on that day was $1.85, leaving a $0.92 MGS.

“That’s the mystery for those of us who are not trying to make a political point about it,” he said adding that a “sloppy faux analyses that seems only intended to score political points won’t help figure this out.”

“MGS could be due to a constraint in the supply chain or a regulatory issue. Or could be exploitation of market power in California’s concentrated refining/distribution network. I’m just arguing that we should figure out what it is,” he said.

In the meantime, state lawmakers are considering a variety of options to create relief. In his State of the State address, Gov. Gavin Newsom proposed, and is moving forward with, a tax rebate that will give everyone with a registered vehicle in California a one-time debit card for $400 per car, up to two cars. Meanwhile Republican Kevin Kiley introduced legislation back in January that would suspend California’s tax on motor vehicle fuel for six months. While Kiley’s proposal has garnered interest from some Democratic lawmakers, it’s a tough sell because the tax isn’t applied at the pump when consumers fill their gas tanks. Rather, most of California’s fuel taxes are paid by gas suppliers, meaning the price of gas would only go down if those sellers choose to pass along the cost savings to consumers rather than increase their profits. Thus, even if legislators reduced taxes by $0.50 cents a gallon, there are no guarantees on how much money, if any, consumers would save.

With summer fast approaching and travel season already upon us here, there is little reason to believe that gas prices in California will significantly drop, at least not until the Russian invasion of Ukraine ends, there is stability in Kuwait and the cause of the mystery gas surcharge is identified. Until then, AAA offers a variety of tips on its website for saving money on gas and maintenance. It notes that properly inflated tires can increase gas mileage by more than 3% per tire and recommends slowing down, driving at a constant speed rather than rapidly accelerating or braking, and turning off A/C five minutes before reaching a destination to improve fuel economy.