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Gas Prices Rising, Restaurants Not Yet Suffering

Gas Prices Rising, Restaurants Not Yet Suffering


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The national average price for a gallon of gasoline has climbed 11 cents in two weeks, and is 40 cents more compared with a year earlier, forcing consumers to brace for more pain at the pump.

But restaurant brands are not yet feeling the effects.

“The rise in [gas] prices has been gradual and almost part of expectations in today’s economy,” David Stidham, vice president of marketing for the 445-unit quick-service chain Culver’s, said. “We’re still not seeing the quick-jerk stoppage in our guest experiences. We’re still growing [transactions] and sales.”

Many restaurants suffered from the abrupt disappearance of consumers’ discretionary spending during the gas-price shocks of 2008, but this year they show positive sales trends as gas prices have increased, especially since January.

Culver’s had a 12-percent increase in same-store sales for January and is on pace to have a double-digit increase for February as well, it said.

The NRN-MillerPulse Survey reported an industry-wide 4.9-percent same-store sales increase in January, which compared with a 1.7-percent rise in January 2011. Respondents to that survey cited favorable weather and strong guest traffic for the increase.

Elsewhere, McDonald’s posted a 7.8-percent increase in domestic same-store sales in January. And Texas Roadhouse officials said in their fourth-quarter earnings call that the brand’s same-store sales are up 6.7 percent through the first six weeks of 2012.

Consumers historically have altered their purchasing behavior for things like restaurants when gas prices climb above $3 per gallon, said David Portalatin, director of industry analysis for market research firm The NPD Group. According to the U.S. Energy Information Administration, the average national gas price was $3.59 per gallon on Monday, up from $3.48 on Feb. 6, and $3.19 a year earlier.

But, since gas prices have been above $3 since December 2010, consumers have accepted them “almost as the new normal,” Culver’s Stidham said.

He noted that a more devastating financial and psychological threshold of $4 per gallon could create pause.

NPD says gas price increases will most likely continue. Americans will in fact have fewer dollars to spend at restaurants, as it remains expensive for them to fill their gas tanks, NPD’s Portalatin said. In 2011, drivers in the United States purchased 1.7 percent fewer gallons of gasoline compared with 2010, but they paid 24 percent more at the pump, he noted.

“Consumers are trying to cut back spending at the pump by driving less, but it’s almost a futile exercise,” Portalatin said. “There’s no doubt that the consumer is losing share of wallet at the pump despite trying to reduce consumption. They can’t keep up.”

Contact Mark Brandau at [email protected]
Follow him on Twitter: @Mark_from_NRN


Here's why California gas prices are so high compared to other states

Gas prices are displayed at a Valero gas station in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

Gas prices are displayed at a Shell gas station in San Francisco, California on Wednesday March 24, 2021.

A motorist refuels a vehicle at a Valero gas station in San Francisco, California on March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

For many working people, 4:30 is a welcome sign that the workday is drawing to a close. But $4.30 &mdash the price for a gallon of gas at some stations in San Francisco this week &mdash is enough to force a double take, and raises the question: Why are gas prices so high right now?

As the Bay Area and the country slowly awaken from their pandemic-induced deep freeze, gas prices have increased as more commerce and better weather have increased demand while the price of oil has gone up. San Francisco, along with Santa Clara and Marin counties, moved to the less restrictive orange tier this week. The other feature they share is eye-popping gas prices at or near $4 per gallon.

That&rsquos a dollar higher than the national average. And why that is may depend on whom you ask.

Some industry observers insist the higher cost of gasoline in California is due to higher taxes and regulations on gas and carbon emissions statewide. State agencies and consumer advocates insist those factors are only partly to blame and that the largest manufacturers charge more in California simply because they can, while big oil companies have held back on ramping up supply, according to the New York Times, after seeing huge cuts to their profits and workforce last year because of the pandemic.

A massive container ship blocking the critical Suez Canal could also increase the price of a variety of goods, including oil.

What is not disputed is that gas prices have soared since the beginning of the year, although they have leveled off somewhat recently. National average prices tracked by the AAA auto club are higher than they have been since May 2019. Although, again, why they&rsquore higher is not so simple.

Crude oil prices have increased since the beginning of the year. According to the California Energy Commission, a barrel of crude went from less than $50 at the start of the year to around $65 now.

That contributes around 38 cents per gallon to gas prices and accounts for around 60% of increased prices for consumers throughout the U.S. and California, according to an email from CEC spokeswoman Lindsay Buckley.

More people driving as coronavirus restrictions have eased has also increased demand, driving up prices, Buckley said.

CEC monitoring of Bay Area bridge traffic shows drivers haven&rsquot returned to pre-pandemic commuting rates, but car travel in the region increased more than 20% between the beginning of January and the beginning of March. &ldquoIt is likely that this recent surge in driving is related to more vaccinations and continued economic recovery,&rdquo Buckley said.

So why are prices so much higher in California specifically?

&ldquoThe overall differential is due largely to higher taxes and environmental fees like cap and trade and the low carbon fuel standard,&rdquo in California, said Severin Borenstein, a UC Berkeley energy economist.

Even factoring in those extra fees, Borenstein said that since 2015 Californians have paid an extra 25 to 30 cents per gallon on top of that, what he calls &ldquothe mystery gasoline surcharge.&rdquo

That adds up to around an extra $4 billion that California residents pay annually for their gas, Borenstein said. He said the spike in prices first started in 2015 after a fire at a Southern California refinery crimped supply, but never went away.

A 2019 report from the CEC also identified the extra 30 cents-per-gallon charge, concluding, &ldquoThe primary cause of the residual price increase is simply that California&rsquos retail gasoline outlets are charging higher prices than those in other states.&rdquo

Californians do pay some of the highest gas taxes in the nation. The American Petroleum Institute lobbying group in a January report found Californians paid more than 80 cents per gallon in taxes, the most of any state, driven mostly by a state excise tax. CEC data estimated those taxes to be a few pennies less per gallon.

Pennsylvania was next on the list at 77 cents on the gallon, according to the API.

Gas prices at a Shell gas station are seen through an empty storefront in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle

The California Department of Justice opened an investigation into the issue in 2019. The case looking at unfair and anticompetitive practices in the state&rsquos oil industry is ongoing in San Francisco Superior Court.

High gas prices tend to hurt people who are least able to afford them.

Research by the Urban Institute has shown that higher gas prices affect working people whose household income falls below the federal poverty threshold and who tend to spend more of their income on gas. That impact is felt doubly by people at the lower end of the wage scale who have seen their employment most affected by the pandemic&rsquos economic fallout.

For some analysts like Patrick De Haan, head of petroleum analysis at GasBuddy, a company that tracks fuel prices, the higher average prices in California are no mystery.

The state&rsquos Low Carbon Fuel Standard, cap-and-trade system to limit emissions, and its taxes at the pump are squarely to blame for higher fuel prices, De Haan said. &ldquoThe greenest policies do cost money.&rdquo


Here's why California gas prices are so high compared to other states

Gas prices are displayed at a Valero gas station in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

Gas prices are displayed at a Shell gas station in San Francisco, California on Wednesday March 24, 2021.

A motorist refuels a vehicle at a Valero gas station in San Francisco, California on March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

For many working people, 4:30 is a welcome sign that the workday is drawing to a close. But $4.30 &mdash the price for a gallon of gas at some stations in San Francisco this week &mdash is enough to force a double take, and raises the question: Why are gas prices so high right now?

As the Bay Area and the country slowly awaken from their pandemic-induced deep freeze, gas prices have increased as more commerce and better weather have increased demand while the price of oil has gone up. San Francisco, along with Santa Clara and Marin counties, moved to the less restrictive orange tier this week. The other feature they share is eye-popping gas prices at or near $4 per gallon.

That&rsquos a dollar higher than the national average. And why that is may depend on whom you ask.

Some industry observers insist the higher cost of gasoline in California is due to higher taxes and regulations on gas and carbon emissions statewide. State agencies and consumer advocates insist those factors are only partly to blame and that the largest manufacturers charge more in California simply because they can, while big oil companies have held back on ramping up supply, according to the New York Times, after seeing huge cuts to their profits and workforce last year because of the pandemic.

A massive container ship blocking the critical Suez Canal could also increase the price of a variety of goods, including oil.

What is not disputed is that gas prices have soared since the beginning of the year, although they have leveled off somewhat recently. National average prices tracked by the AAA auto club are higher than they have been since May 2019. Although, again, why they&rsquore higher is not so simple.

Crude oil prices have increased since the beginning of the year. According to the California Energy Commission, a barrel of crude went from less than $50 at the start of the year to around $65 now.

That contributes around 38 cents per gallon to gas prices and accounts for around 60% of increased prices for consumers throughout the U.S. and California, according to an email from CEC spokeswoman Lindsay Buckley.

More people driving as coronavirus restrictions have eased has also increased demand, driving up prices, Buckley said.

CEC monitoring of Bay Area bridge traffic shows drivers haven&rsquot returned to pre-pandemic commuting rates, but car travel in the region increased more than 20% between the beginning of January and the beginning of March. &ldquoIt is likely that this recent surge in driving is related to more vaccinations and continued economic recovery,&rdquo Buckley said.

So why are prices so much higher in California specifically?

&ldquoThe overall differential is due largely to higher taxes and environmental fees like cap and trade and the low carbon fuel standard,&rdquo in California, said Severin Borenstein, a UC Berkeley energy economist.

Even factoring in those extra fees, Borenstein said that since 2015 Californians have paid an extra 25 to 30 cents per gallon on top of that, what he calls &ldquothe mystery gasoline surcharge.&rdquo

That adds up to around an extra $4 billion that California residents pay annually for their gas, Borenstein said. He said the spike in prices first started in 2015 after a fire at a Southern California refinery crimped supply, but never went away.

A 2019 report from the CEC also identified the extra 30 cents-per-gallon charge, concluding, &ldquoThe primary cause of the residual price increase is simply that California&rsquos retail gasoline outlets are charging higher prices than those in other states.&rdquo

Californians do pay some of the highest gas taxes in the nation. The American Petroleum Institute lobbying group in a January report found Californians paid more than 80 cents per gallon in taxes, the most of any state, driven mostly by a state excise tax. CEC data estimated those taxes to be a few pennies less per gallon.

Pennsylvania was next on the list at 77 cents on the gallon, according to the API.

Gas prices at a Shell gas station are seen through an empty storefront in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle

The California Department of Justice opened an investigation into the issue in 2019. The case looking at unfair and anticompetitive practices in the state&rsquos oil industry is ongoing in San Francisco Superior Court.

High gas prices tend to hurt people who are least able to afford them.

Research by the Urban Institute has shown that higher gas prices affect working people whose household income falls below the federal poverty threshold and who tend to spend more of their income on gas. That impact is felt doubly by people at the lower end of the wage scale who have seen their employment most affected by the pandemic&rsquos economic fallout.

For some analysts like Patrick De Haan, head of petroleum analysis at GasBuddy, a company that tracks fuel prices, the higher average prices in California are no mystery.

The state&rsquos Low Carbon Fuel Standard, cap-and-trade system to limit emissions, and its taxes at the pump are squarely to blame for higher fuel prices, De Haan said. &ldquoThe greenest policies do cost money.&rdquo


Here's why California gas prices are so high compared to other states

Gas prices are displayed at a Valero gas station in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

Gas prices are displayed at a Shell gas station in San Francisco, California on Wednesday March 24, 2021.

A motorist refuels a vehicle at a Valero gas station in San Francisco, California on March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

For many working people, 4:30 is a welcome sign that the workday is drawing to a close. But $4.30 &mdash the price for a gallon of gas at some stations in San Francisco this week &mdash is enough to force a double take, and raises the question: Why are gas prices so high right now?

As the Bay Area and the country slowly awaken from their pandemic-induced deep freeze, gas prices have increased as more commerce and better weather have increased demand while the price of oil has gone up. San Francisco, along with Santa Clara and Marin counties, moved to the less restrictive orange tier this week. The other feature they share is eye-popping gas prices at or near $4 per gallon.

That&rsquos a dollar higher than the national average. And why that is may depend on whom you ask.

Some industry observers insist the higher cost of gasoline in California is due to higher taxes and regulations on gas and carbon emissions statewide. State agencies and consumer advocates insist those factors are only partly to blame and that the largest manufacturers charge more in California simply because they can, while big oil companies have held back on ramping up supply, according to the New York Times, after seeing huge cuts to their profits and workforce last year because of the pandemic.

A massive container ship blocking the critical Suez Canal could also increase the price of a variety of goods, including oil.

What is not disputed is that gas prices have soared since the beginning of the year, although they have leveled off somewhat recently. National average prices tracked by the AAA auto club are higher than they have been since May 2019. Although, again, why they&rsquore higher is not so simple.

Crude oil prices have increased since the beginning of the year. According to the California Energy Commission, a barrel of crude went from less than $50 at the start of the year to around $65 now.

That contributes around 38 cents per gallon to gas prices and accounts for around 60% of increased prices for consumers throughout the U.S. and California, according to an email from CEC spokeswoman Lindsay Buckley.

More people driving as coronavirus restrictions have eased has also increased demand, driving up prices, Buckley said.

CEC monitoring of Bay Area bridge traffic shows drivers haven&rsquot returned to pre-pandemic commuting rates, but car travel in the region increased more than 20% between the beginning of January and the beginning of March. &ldquoIt is likely that this recent surge in driving is related to more vaccinations and continued economic recovery,&rdquo Buckley said.

So why are prices so much higher in California specifically?

&ldquoThe overall differential is due largely to higher taxes and environmental fees like cap and trade and the low carbon fuel standard,&rdquo in California, said Severin Borenstein, a UC Berkeley energy economist.

Even factoring in those extra fees, Borenstein said that since 2015 Californians have paid an extra 25 to 30 cents per gallon on top of that, what he calls &ldquothe mystery gasoline surcharge.&rdquo

That adds up to around an extra $4 billion that California residents pay annually for their gas, Borenstein said. He said the spike in prices first started in 2015 after a fire at a Southern California refinery crimped supply, but never went away.

A 2019 report from the CEC also identified the extra 30 cents-per-gallon charge, concluding, &ldquoThe primary cause of the residual price increase is simply that California&rsquos retail gasoline outlets are charging higher prices than those in other states.&rdquo

Californians do pay some of the highest gas taxes in the nation. The American Petroleum Institute lobbying group in a January report found Californians paid more than 80 cents per gallon in taxes, the most of any state, driven mostly by a state excise tax. CEC data estimated those taxes to be a few pennies less per gallon.

Pennsylvania was next on the list at 77 cents on the gallon, according to the API.

Gas prices at a Shell gas station are seen through an empty storefront in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle

The California Department of Justice opened an investigation into the issue in 2019. The case looking at unfair and anticompetitive practices in the state&rsquos oil industry is ongoing in San Francisco Superior Court.

High gas prices tend to hurt people who are least able to afford them.

Research by the Urban Institute has shown that higher gas prices affect working people whose household income falls below the federal poverty threshold and who tend to spend more of their income on gas. That impact is felt doubly by people at the lower end of the wage scale who have seen their employment most affected by the pandemic&rsquos economic fallout.

For some analysts like Patrick De Haan, head of petroleum analysis at GasBuddy, a company that tracks fuel prices, the higher average prices in California are no mystery.

The state&rsquos Low Carbon Fuel Standard, cap-and-trade system to limit emissions, and its taxes at the pump are squarely to blame for higher fuel prices, De Haan said. &ldquoThe greenest policies do cost money.&rdquo


Here's why California gas prices are so high compared to other states

Gas prices are displayed at a Valero gas station in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

Gas prices are displayed at a Shell gas station in San Francisco, California on Wednesday March 24, 2021.

A motorist refuels a vehicle at a Valero gas station in San Francisco, California on March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

For many working people, 4:30 is a welcome sign that the workday is drawing to a close. But $4.30 &mdash the price for a gallon of gas at some stations in San Francisco this week &mdash is enough to force a double take, and raises the question: Why are gas prices so high right now?

As the Bay Area and the country slowly awaken from their pandemic-induced deep freeze, gas prices have increased as more commerce and better weather have increased demand while the price of oil has gone up. San Francisco, along with Santa Clara and Marin counties, moved to the less restrictive orange tier this week. The other feature they share is eye-popping gas prices at or near $4 per gallon.

That&rsquos a dollar higher than the national average. And why that is may depend on whom you ask.

Some industry observers insist the higher cost of gasoline in California is due to higher taxes and regulations on gas and carbon emissions statewide. State agencies and consumer advocates insist those factors are only partly to blame and that the largest manufacturers charge more in California simply because they can, while big oil companies have held back on ramping up supply, according to the New York Times, after seeing huge cuts to their profits and workforce last year because of the pandemic.

A massive container ship blocking the critical Suez Canal could also increase the price of a variety of goods, including oil.

What is not disputed is that gas prices have soared since the beginning of the year, although they have leveled off somewhat recently. National average prices tracked by the AAA auto club are higher than they have been since May 2019. Although, again, why they&rsquore higher is not so simple.

Crude oil prices have increased since the beginning of the year. According to the California Energy Commission, a barrel of crude went from less than $50 at the start of the year to around $65 now.

That contributes around 38 cents per gallon to gas prices and accounts for around 60% of increased prices for consumers throughout the U.S. and California, according to an email from CEC spokeswoman Lindsay Buckley.

More people driving as coronavirus restrictions have eased has also increased demand, driving up prices, Buckley said.

CEC monitoring of Bay Area bridge traffic shows drivers haven&rsquot returned to pre-pandemic commuting rates, but car travel in the region increased more than 20% between the beginning of January and the beginning of March. &ldquoIt is likely that this recent surge in driving is related to more vaccinations and continued economic recovery,&rdquo Buckley said.

So why are prices so much higher in California specifically?

&ldquoThe overall differential is due largely to higher taxes and environmental fees like cap and trade and the low carbon fuel standard,&rdquo in California, said Severin Borenstein, a UC Berkeley energy economist.

Even factoring in those extra fees, Borenstein said that since 2015 Californians have paid an extra 25 to 30 cents per gallon on top of that, what he calls &ldquothe mystery gasoline surcharge.&rdquo

That adds up to around an extra $4 billion that California residents pay annually for their gas, Borenstein said. He said the spike in prices first started in 2015 after a fire at a Southern California refinery crimped supply, but never went away.

A 2019 report from the CEC also identified the extra 30 cents-per-gallon charge, concluding, &ldquoThe primary cause of the residual price increase is simply that California&rsquos retail gasoline outlets are charging higher prices than those in other states.&rdquo

Californians do pay some of the highest gas taxes in the nation. The American Petroleum Institute lobbying group in a January report found Californians paid more than 80 cents per gallon in taxes, the most of any state, driven mostly by a state excise tax. CEC data estimated those taxes to be a few pennies less per gallon.

Pennsylvania was next on the list at 77 cents on the gallon, according to the API.

Gas prices at a Shell gas station are seen through an empty storefront in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle

The California Department of Justice opened an investigation into the issue in 2019. The case looking at unfair and anticompetitive practices in the state&rsquos oil industry is ongoing in San Francisco Superior Court.

High gas prices tend to hurt people who are least able to afford them.

Research by the Urban Institute has shown that higher gas prices affect working people whose household income falls below the federal poverty threshold and who tend to spend more of their income on gas. That impact is felt doubly by people at the lower end of the wage scale who have seen their employment most affected by the pandemic&rsquos economic fallout.

For some analysts like Patrick De Haan, head of petroleum analysis at GasBuddy, a company that tracks fuel prices, the higher average prices in California are no mystery.

The state&rsquos Low Carbon Fuel Standard, cap-and-trade system to limit emissions, and its taxes at the pump are squarely to blame for higher fuel prices, De Haan said. &ldquoThe greenest policies do cost money.&rdquo


Here's why California gas prices are so high compared to other states

Gas prices are displayed at a Valero gas station in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

Gas prices are displayed at a Shell gas station in San Francisco, California on Wednesday March 24, 2021.

A motorist refuels a vehicle at a Valero gas station in San Francisco, California on March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

For many working people, 4:30 is a welcome sign that the workday is drawing to a close. But $4.30 &mdash the price for a gallon of gas at some stations in San Francisco this week &mdash is enough to force a double take, and raises the question: Why are gas prices so high right now?

As the Bay Area and the country slowly awaken from their pandemic-induced deep freeze, gas prices have increased as more commerce and better weather have increased demand while the price of oil has gone up. San Francisco, along with Santa Clara and Marin counties, moved to the less restrictive orange tier this week. The other feature they share is eye-popping gas prices at or near $4 per gallon.

That&rsquos a dollar higher than the national average. And why that is may depend on whom you ask.

Some industry observers insist the higher cost of gasoline in California is due to higher taxes and regulations on gas and carbon emissions statewide. State agencies and consumer advocates insist those factors are only partly to blame and that the largest manufacturers charge more in California simply because they can, while big oil companies have held back on ramping up supply, according to the New York Times, after seeing huge cuts to their profits and workforce last year because of the pandemic.

A massive container ship blocking the critical Suez Canal could also increase the price of a variety of goods, including oil.

What is not disputed is that gas prices have soared since the beginning of the year, although they have leveled off somewhat recently. National average prices tracked by the AAA auto club are higher than they have been since May 2019. Although, again, why they&rsquore higher is not so simple.

Crude oil prices have increased since the beginning of the year. According to the California Energy Commission, a barrel of crude went from less than $50 at the start of the year to around $65 now.

That contributes around 38 cents per gallon to gas prices and accounts for around 60% of increased prices for consumers throughout the U.S. and California, according to an email from CEC spokeswoman Lindsay Buckley.

More people driving as coronavirus restrictions have eased has also increased demand, driving up prices, Buckley said.

CEC monitoring of Bay Area bridge traffic shows drivers haven&rsquot returned to pre-pandemic commuting rates, but car travel in the region increased more than 20% between the beginning of January and the beginning of March. &ldquoIt is likely that this recent surge in driving is related to more vaccinations and continued economic recovery,&rdquo Buckley said.

So why are prices so much higher in California specifically?

&ldquoThe overall differential is due largely to higher taxes and environmental fees like cap and trade and the low carbon fuel standard,&rdquo in California, said Severin Borenstein, a UC Berkeley energy economist.

Even factoring in those extra fees, Borenstein said that since 2015 Californians have paid an extra 25 to 30 cents per gallon on top of that, what he calls &ldquothe mystery gasoline surcharge.&rdquo

That adds up to around an extra $4 billion that California residents pay annually for their gas, Borenstein said. He said the spike in prices first started in 2015 after a fire at a Southern California refinery crimped supply, but never went away.

A 2019 report from the CEC also identified the extra 30 cents-per-gallon charge, concluding, &ldquoThe primary cause of the residual price increase is simply that California&rsquos retail gasoline outlets are charging higher prices than those in other states.&rdquo

Californians do pay some of the highest gas taxes in the nation. The American Petroleum Institute lobbying group in a January report found Californians paid more than 80 cents per gallon in taxes, the most of any state, driven mostly by a state excise tax. CEC data estimated those taxes to be a few pennies less per gallon.

Pennsylvania was next on the list at 77 cents on the gallon, according to the API.

Gas prices at a Shell gas station are seen through an empty storefront in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle

The California Department of Justice opened an investigation into the issue in 2019. The case looking at unfair and anticompetitive practices in the state&rsquos oil industry is ongoing in San Francisco Superior Court.

High gas prices tend to hurt people who are least able to afford them.

Research by the Urban Institute has shown that higher gas prices affect working people whose household income falls below the federal poverty threshold and who tend to spend more of their income on gas. That impact is felt doubly by people at the lower end of the wage scale who have seen their employment most affected by the pandemic&rsquos economic fallout.

For some analysts like Patrick De Haan, head of petroleum analysis at GasBuddy, a company that tracks fuel prices, the higher average prices in California are no mystery.

The state&rsquos Low Carbon Fuel Standard, cap-and-trade system to limit emissions, and its taxes at the pump are squarely to blame for higher fuel prices, De Haan said. &ldquoThe greenest policies do cost money.&rdquo


Here's why California gas prices are so high compared to other states

Gas prices are displayed at a Valero gas station in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

Gas prices are displayed at a Shell gas station in San Francisco, California on Wednesday March 24, 2021.

A motorist refuels a vehicle at a Valero gas station in San Francisco, California on March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

For many working people, 4:30 is a welcome sign that the workday is drawing to a close. But $4.30 &mdash the price for a gallon of gas at some stations in San Francisco this week &mdash is enough to force a double take, and raises the question: Why are gas prices so high right now?

As the Bay Area and the country slowly awaken from their pandemic-induced deep freeze, gas prices have increased as more commerce and better weather have increased demand while the price of oil has gone up. San Francisco, along with Santa Clara and Marin counties, moved to the less restrictive orange tier this week. The other feature they share is eye-popping gas prices at or near $4 per gallon.

That&rsquos a dollar higher than the national average. And why that is may depend on whom you ask.

Some industry observers insist the higher cost of gasoline in California is due to higher taxes and regulations on gas and carbon emissions statewide. State agencies and consumer advocates insist those factors are only partly to blame and that the largest manufacturers charge more in California simply because they can, while big oil companies have held back on ramping up supply, according to the New York Times, after seeing huge cuts to their profits and workforce last year because of the pandemic.

A massive container ship blocking the critical Suez Canal could also increase the price of a variety of goods, including oil.

What is not disputed is that gas prices have soared since the beginning of the year, although they have leveled off somewhat recently. National average prices tracked by the AAA auto club are higher than they have been since May 2019. Although, again, why they&rsquore higher is not so simple.

Crude oil prices have increased since the beginning of the year. According to the California Energy Commission, a barrel of crude went from less than $50 at the start of the year to around $65 now.

That contributes around 38 cents per gallon to gas prices and accounts for around 60% of increased prices for consumers throughout the U.S. and California, according to an email from CEC spokeswoman Lindsay Buckley.

More people driving as coronavirus restrictions have eased has also increased demand, driving up prices, Buckley said.

CEC monitoring of Bay Area bridge traffic shows drivers haven&rsquot returned to pre-pandemic commuting rates, but car travel in the region increased more than 20% between the beginning of January and the beginning of March. &ldquoIt is likely that this recent surge in driving is related to more vaccinations and continued economic recovery,&rdquo Buckley said.

So why are prices so much higher in California specifically?

&ldquoThe overall differential is due largely to higher taxes and environmental fees like cap and trade and the low carbon fuel standard,&rdquo in California, said Severin Borenstein, a UC Berkeley energy economist.

Even factoring in those extra fees, Borenstein said that since 2015 Californians have paid an extra 25 to 30 cents per gallon on top of that, what he calls &ldquothe mystery gasoline surcharge.&rdquo

That adds up to around an extra $4 billion that California residents pay annually for their gas, Borenstein said. He said the spike in prices first started in 2015 after a fire at a Southern California refinery crimped supply, but never went away.

A 2019 report from the CEC also identified the extra 30 cents-per-gallon charge, concluding, &ldquoThe primary cause of the residual price increase is simply that California&rsquos retail gasoline outlets are charging higher prices than those in other states.&rdquo

Californians do pay some of the highest gas taxes in the nation. The American Petroleum Institute lobbying group in a January report found Californians paid more than 80 cents per gallon in taxes, the most of any state, driven mostly by a state excise tax. CEC data estimated those taxes to be a few pennies less per gallon.

Pennsylvania was next on the list at 77 cents on the gallon, according to the API.

Gas prices at a Shell gas station are seen through an empty storefront in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle

The California Department of Justice opened an investigation into the issue in 2019. The case looking at unfair and anticompetitive practices in the state&rsquos oil industry is ongoing in San Francisco Superior Court.

High gas prices tend to hurt people who are least able to afford them.

Research by the Urban Institute has shown that higher gas prices affect working people whose household income falls below the federal poverty threshold and who tend to spend more of their income on gas. That impact is felt doubly by people at the lower end of the wage scale who have seen their employment most affected by the pandemic&rsquos economic fallout.

For some analysts like Patrick De Haan, head of petroleum analysis at GasBuddy, a company that tracks fuel prices, the higher average prices in California are no mystery.

The state&rsquos Low Carbon Fuel Standard, cap-and-trade system to limit emissions, and its taxes at the pump are squarely to blame for higher fuel prices, De Haan said. &ldquoThe greenest policies do cost money.&rdquo


Here's why California gas prices are so high compared to other states

Gas prices are displayed at a Valero gas station in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

Gas prices are displayed at a Shell gas station in San Francisco, California on Wednesday March 24, 2021.

A motorist refuels a vehicle at a Valero gas station in San Francisco, California on March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

For many working people, 4:30 is a welcome sign that the workday is drawing to a close. But $4.30 &mdash the price for a gallon of gas at some stations in San Francisco this week &mdash is enough to force a double take, and raises the question: Why are gas prices so high right now?

As the Bay Area and the country slowly awaken from their pandemic-induced deep freeze, gas prices have increased as more commerce and better weather have increased demand while the price of oil has gone up. San Francisco, along with Santa Clara and Marin counties, moved to the less restrictive orange tier this week. The other feature they share is eye-popping gas prices at or near $4 per gallon.

That&rsquos a dollar higher than the national average. And why that is may depend on whom you ask.

Some industry observers insist the higher cost of gasoline in California is due to higher taxes and regulations on gas and carbon emissions statewide. State agencies and consumer advocates insist those factors are only partly to blame and that the largest manufacturers charge more in California simply because they can, while big oil companies have held back on ramping up supply, according to the New York Times, after seeing huge cuts to their profits and workforce last year because of the pandemic.

A massive container ship blocking the critical Suez Canal could also increase the price of a variety of goods, including oil.

What is not disputed is that gas prices have soared since the beginning of the year, although they have leveled off somewhat recently. National average prices tracked by the AAA auto club are higher than they have been since May 2019. Although, again, why they&rsquore higher is not so simple.

Crude oil prices have increased since the beginning of the year. According to the California Energy Commission, a barrel of crude went from less than $50 at the start of the year to around $65 now.

That contributes around 38 cents per gallon to gas prices and accounts for around 60% of increased prices for consumers throughout the U.S. and California, according to an email from CEC spokeswoman Lindsay Buckley.

More people driving as coronavirus restrictions have eased has also increased demand, driving up prices, Buckley said.

CEC monitoring of Bay Area bridge traffic shows drivers haven&rsquot returned to pre-pandemic commuting rates, but car travel in the region increased more than 20% between the beginning of January and the beginning of March. &ldquoIt is likely that this recent surge in driving is related to more vaccinations and continued economic recovery,&rdquo Buckley said.

So why are prices so much higher in California specifically?

&ldquoThe overall differential is due largely to higher taxes and environmental fees like cap and trade and the low carbon fuel standard,&rdquo in California, said Severin Borenstein, a UC Berkeley energy economist.

Even factoring in those extra fees, Borenstein said that since 2015 Californians have paid an extra 25 to 30 cents per gallon on top of that, what he calls &ldquothe mystery gasoline surcharge.&rdquo

That adds up to around an extra $4 billion that California residents pay annually for their gas, Borenstein said. He said the spike in prices first started in 2015 after a fire at a Southern California refinery crimped supply, but never went away.

A 2019 report from the CEC also identified the extra 30 cents-per-gallon charge, concluding, &ldquoThe primary cause of the residual price increase is simply that California&rsquos retail gasoline outlets are charging higher prices than those in other states.&rdquo

Californians do pay some of the highest gas taxes in the nation. The American Petroleum Institute lobbying group in a January report found Californians paid more than 80 cents per gallon in taxes, the most of any state, driven mostly by a state excise tax. CEC data estimated those taxes to be a few pennies less per gallon.

Pennsylvania was next on the list at 77 cents on the gallon, according to the API.

Gas prices at a Shell gas station are seen through an empty storefront in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle

The California Department of Justice opened an investigation into the issue in 2019. The case looking at unfair and anticompetitive practices in the state&rsquos oil industry is ongoing in San Francisco Superior Court.

High gas prices tend to hurt people who are least able to afford them.

Research by the Urban Institute has shown that higher gas prices affect working people whose household income falls below the federal poverty threshold and who tend to spend more of their income on gas. That impact is felt doubly by people at the lower end of the wage scale who have seen their employment most affected by the pandemic&rsquos economic fallout.

For some analysts like Patrick De Haan, head of petroleum analysis at GasBuddy, a company that tracks fuel prices, the higher average prices in California are no mystery.

The state&rsquos Low Carbon Fuel Standard, cap-and-trade system to limit emissions, and its taxes at the pump are squarely to blame for higher fuel prices, De Haan said. &ldquoThe greenest policies do cost money.&rdquo


Here's why California gas prices are so high compared to other states

Gas prices are displayed at a Valero gas station in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

Gas prices are displayed at a Shell gas station in San Francisco, California on Wednesday March 24, 2021.

A motorist refuels a vehicle at a Valero gas station in San Francisco, California on March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

For many working people, 4:30 is a welcome sign that the workday is drawing to a close. But $4.30 &mdash the price for a gallon of gas at some stations in San Francisco this week &mdash is enough to force a double take, and raises the question: Why are gas prices so high right now?

As the Bay Area and the country slowly awaken from their pandemic-induced deep freeze, gas prices have increased as more commerce and better weather have increased demand while the price of oil has gone up. San Francisco, along with Santa Clara and Marin counties, moved to the less restrictive orange tier this week. The other feature they share is eye-popping gas prices at or near $4 per gallon.

That&rsquos a dollar higher than the national average. And why that is may depend on whom you ask.

Some industry observers insist the higher cost of gasoline in California is due to higher taxes and regulations on gas and carbon emissions statewide. State agencies and consumer advocates insist those factors are only partly to blame and that the largest manufacturers charge more in California simply because they can, while big oil companies have held back on ramping up supply, according to the New York Times, after seeing huge cuts to their profits and workforce last year because of the pandemic.

A massive container ship blocking the critical Suez Canal could also increase the price of a variety of goods, including oil.

What is not disputed is that gas prices have soared since the beginning of the year, although they have leveled off somewhat recently. National average prices tracked by the AAA auto club are higher than they have been since May 2019. Although, again, why they&rsquore higher is not so simple.

Crude oil prices have increased since the beginning of the year. According to the California Energy Commission, a barrel of crude went from less than $50 at the start of the year to around $65 now.

That contributes around 38 cents per gallon to gas prices and accounts for around 60% of increased prices for consumers throughout the U.S. and California, according to an email from CEC spokeswoman Lindsay Buckley.

More people driving as coronavirus restrictions have eased has also increased demand, driving up prices, Buckley said.

CEC monitoring of Bay Area bridge traffic shows drivers haven&rsquot returned to pre-pandemic commuting rates, but car travel in the region increased more than 20% between the beginning of January and the beginning of March. &ldquoIt is likely that this recent surge in driving is related to more vaccinations and continued economic recovery,&rdquo Buckley said.

So why are prices so much higher in California specifically?

&ldquoThe overall differential is due largely to higher taxes and environmental fees like cap and trade and the low carbon fuel standard,&rdquo in California, said Severin Borenstein, a UC Berkeley energy economist.

Even factoring in those extra fees, Borenstein said that since 2015 Californians have paid an extra 25 to 30 cents per gallon on top of that, what he calls &ldquothe mystery gasoline surcharge.&rdquo

That adds up to around an extra $4 billion that California residents pay annually for their gas, Borenstein said. He said the spike in prices first started in 2015 after a fire at a Southern California refinery crimped supply, but never went away.

A 2019 report from the CEC also identified the extra 30 cents-per-gallon charge, concluding, &ldquoThe primary cause of the residual price increase is simply that California&rsquos retail gasoline outlets are charging higher prices than those in other states.&rdquo

Californians do pay some of the highest gas taxes in the nation. The American Petroleum Institute lobbying group in a January report found Californians paid more than 80 cents per gallon in taxes, the most of any state, driven mostly by a state excise tax. CEC data estimated those taxes to be a few pennies less per gallon.

Pennsylvania was next on the list at 77 cents on the gallon, according to the API.

Gas prices at a Shell gas station are seen through an empty storefront in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle

The California Department of Justice opened an investigation into the issue in 2019. The case looking at unfair and anticompetitive practices in the state&rsquos oil industry is ongoing in San Francisco Superior Court.

High gas prices tend to hurt people who are least able to afford them.

Research by the Urban Institute has shown that higher gas prices affect working people whose household income falls below the federal poverty threshold and who tend to spend more of their income on gas. That impact is felt doubly by people at the lower end of the wage scale who have seen their employment most affected by the pandemic&rsquos economic fallout.

For some analysts like Patrick De Haan, head of petroleum analysis at GasBuddy, a company that tracks fuel prices, the higher average prices in California are no mystery.

The state&rsquos Low Carbon Fuel Standard, cap-and-trade system to limit emissions, and its taxes at the pump are squarely to blame for higher fuel prices, De Haan said. &ldquoThe greenest policies do cost money.&rdquo


Here's why California gas prices are so high compared to other states

Gas prices are displayed at a Valero gas station in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

Gas prices are displayed at a Shell gas station in San Francisco, California on Wednesday March 24, 2021.

A motorist refuels a vehicle at a Valero gas station in San Francisco, California on March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

For many working people, 4:30 is a welcome sign that the workday is drawing to a close. But $4.30 &mdash the price for a gallon of gas at some stations in San Francisco this week &mdash is enough to force a double take, and raises the question: Why are gas prices so high right now?

As the Bay Area and the country slowly awaken from their pandemic-induced deep freeze, gas prices have increased as more commerce and better weather have increased demand while the price of oil has gone up. San Francisco, along with Santa Clara and Marin counties, moved to the less restrictive orange tier this week. The other feature they share is eye-popping gas prices at or near $4 per gallon.

That&rsquos a dollar higher than the national average. And why that is may depend on whom you ask.

Some industry observers insist the higher cost of gasoline in California is due to higher taxes and regulations on gas and carbon emissions statewide. State agencies and consumer advocates insist those factors are only partly to blame and that the largest manufacturers charge more in California simply because they can, while big oil companies have held back on ramping up supply, according to the New York Times, after seeing huge cuts to their profits and workforce last year because of the pandemic.

A massive container ship blocking the critical Suez Canal could also increase the price of a variety of goods, including oil.

What is not disputed is that gas prices have soared since the beginning of the year, although they have leveled off somewhat recently. National average prices tracked by the AAA auto club are higher than they have been since May 2019. Although, again, why they&rsquore higher is not so simple.

Crude oil prices have increased since the beginning of the year. According to the California Energy Commission, a barrel of crude went from less than $50 at the start of the year to around $65 now.

That contributes around 38 cents per gallon to gas prices and accounts for around 60% of increased prices for consumers throughout the U.S. and California, according to an email from CEC spokeswoman Lindsay Buckley.

More people driving as coronavirus restrictions have eased has also increased demand, driving up prices, Buckley said.

CEC monitoring of Bay Area bridge traffic shows drivers haven&rsquot returned to pre-pandemic commuting rates, but car travel in the region increased more than 20% between the beginning of January and the beginning of March. &ldquoIt is likely that this recent surge in driving is related to more vaccinations and continued economic recovery,&rdquo Buckley said.

So why are prices so much higher in California specifically?

&ldquoThe overall differential is due largely to higher taxes and environmental fees like cap and trade and the low carbon fuel standard,&rdquo in California, said Severin Borenstein, a UC Berkeley energy economist.

Even factoring in those extra fees, Borenstein said that since 2015 Californians have paid an extra 25 to 30 cents per gallon on top of that, what he calls &ldquothe mystery gasoline surcharge.&rdquo

That adds up to around an extra $4 billion that California residents pay annually for their gas, Borenstein said. He said the spike in prices first started in 2015 after a fire at a Southern California refinery crimped supply, but never went away.

A 2019 report from the CEC also identified the extra 30 cents-per-gallon charge, concluding, &ldquoThe primary cause of the residual price increase is simply that California&rsquos retail gasoline outlets are charging higher prices than those in other states.&rdquo

Californians do pay some of the highest gas taxes in the nation. The American Petroleum Institute lobbying group in a January report found Californians paid more than 80 cents per gallon in taxes, the most of any state, driven mostly by a state excise tax. CEC data estimated those taxes to be a few pennies less per gallon.

Pennsylvania was next on the list at 77 cents on the gallon, according to the API.

Gas prices at a Shell gas station are seen through an empty storefront in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle

The California Department of Justice opened an investigation into the issue in 2019. The case looking at unfair and anticompetitive practices in the state&rsquos oil industry is ongoing in San Francisco Superior Court.

High gas prices tend to hurt people who are least able to afford them.

Research by the Urban Institute has shown that higher gas prices affect working people whose household income falls below the federal poverty threshold and who tend to spend more of their income on gas. That impact is felt doubly by people at the lower end of the wage scale who have seen their employment most affected by the pandemic&rsquos economic fallout.

For some analysts like Patrick De Haan, head of petroleum analysis at GasBuddy, a company that tracks fuel prices, the higher average prices in California are no mystery.

The state&rsquos Low Carbon Fuel Standard, cap-and-trade system to limit emissions, and its taxes at the pump are squarely to blame for higher fuel prices, De Haan said. &ldquoThe greenest policies do cost money.&rdquo


Here's why California gas prices are so high compared to other states

Gas prices are displayed at a Valero gas station in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

Gas prices are displayed at a Shell gas station in San Francisco, California on Wednesday March 24, 2021.

A motorist refuels a vehicle at a Valero gas station in San Francisco, California on March 24, 2021.

Stephen Lam / The Chronicle Show More Show Less

For many working people, 4:30 is a welcome sign that the workday is drawing to a close. But $4.30 &mdash the price for a gallon of gas at some stations in San Francisco this week &mdash is enough to force a double take, and raises the question: Why are gas prices so high right now?

As the Bay Area and the country slowly awaken from their pandemic-induced deep freeze, gas prices have increased as more commerce and better weather have increased demand while the price of oil has gone up. San Francisco, along with Santa Clara and Marin counties, moved to the less restrictive orange tier this week. The other feature they share is eye-popping gas prices at or near $4 per gallon.

That&rsquos a dollar higher than the national average. And why that is may depend on whom you ask.

Some industry observers insist the higher cost of gasoline in California is due to higher taxes and regulations on gas and carbon emissions statewide. State agencies and consumer advocates insist those factors are only partly to blame and that the largest manufacturers charge more in California simply because they can, while big oil companies have held back on ramping up supply, according to the New York Times, after seeing huge cuts to their profits and workforce last year because of the pandemic.

A massive container ship blocking the critical Suez Canal could also increase the price of a variety of goods, including oil.

What is not disputed is that gas prices have soared since the beginning of the year, although they have leveled off somewhat recently. National average prices tracked by the AAA auto club are higher than they have been since May 2019. Although, again, why they&rsquore higher is not so simple.

Crude oil prices have increased since the beginning of the year. According to the California Energy Commission, a barrel of crude went from less than $50 at the start of the year to around $65 now.

That contributes around 38 cents per gallon to gas prices and accounts for around 60% of increased prices for consumers throughout the U.S. and California, according to an email from CEC spokeswoman Lindsay Buckley.

More people driving as coronavirus restrictions have eased has also increased demand, driving up prices, Buckley said.

CEC monitoring of Bay Area bridge traffic shows drivers haven&rsquot returned to pre-pandemic commuting rates, but car travel in the region increased more than 20% between the beginning of January and the beginning of March. &ldquoIt is likely that this recent surge in driving is related to more vaccinations and continued economic recovery,&rdquo Buckley said.

So why are prices so much higher in California specifically?

&ldquoThe overall differential is due largely to higher taxes and environmental fees like cap and trade and the low carbon fuel standard,&rdquo in California, said Severin Borenstein, a UC Berkeley energy economist.

Even factoring in those extra fees, Borenstein said that since 2015 Californians have paid an extra 25 to 30 cents per gallon on top of that, what he calls &ldquothe mystery gasoline surcharge.&rdquo

That adds up to around an extra $4 billion that California residents pay annually for their gas, Borenstein said. He said the spike in prices first started in 2015 after a fire at a Southern California refinery crimped supply, but never went away.

A 2019 report from the CEC also identified the extra 30 cents-per-gallon charge, concluding, &ldquoThe primary cause of the residual price increase is simply that California&rsquos retail gasoline outlets are charging higher prices than those in other states.&rdquo

Californians do pay some of the highest gas taxes in the nation. The American Petroleum Institute lobbying group in a January report found Californians paid more than 80 cents per gallon in taxes, the most of any state, driven mostly by a state excise tax. CEC data estimated those taxes to be a few pennies less per gallon.

Pennsylvania was next on the list at 77 cents on the gallon, according to the API.

Gas prices at a Shell gas station are seen through an empty storefront in San Francisco, California on Wednesday March 24, 2021.

Stephen Lam / The Chronicle

The California Department of Justice opened an investigation into the issue in 2019. The case looking at unfair and anticompetitive practices in the state&rsquos oil industry is ongoing in San Francisco Superior Court.

High gas prices tend to hurt people who are least able to afford them.

Research by the Urban Institute has shown that higher gas prices affect working people whose household income falls below the federal poverty threshold and who tend to spend more of their income on gas. That impact is felt doubly by people at the lower end of the wage scale who have seen their employment most affected by the pandemic&rsquos economic fallout.

For some analysts like Patrick De Haan, head of petroleum analysis at GasBuddy, a company that tracks fuel prices, the higher average prices in California are no mystery.

The state&rsquos Low Carbon Fuel Standard, cap-and-trade system to limit emissions, and its taxes at the pump are squarely to blame for higher fuel prices, De Haan said. &ldquoThe greenest policies do cost money.&rdquo



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