California Gas Prices Highest in U.S., but No Evidence of Price Gouging

State investigation finds complex factors behind soaring fuel costs, as refineries close and environmental policies impact supply

Apr. 3, 2026 at 2:48am by Ben Kaplan

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A minimalist illustration composed of bold geometric shapes in primary colors, conceptually representing the complex economic factors driving high gas prices in California.An abstract illustration capturing the intricate economic forces behind California's soaring gas prices, from refinery closures to environmental policies.San Francisco Today

A six-month CBS News California investigation found that while California drivers pay the highest gas prices in the nation, state officials found no evidence of illegal price gouging by oil companies. Instead, the report cites a combination of state policies, refinery closures, and global supply risks that uniquely impact California's isolated fuel market.

Why it matters

California's high gas prices have been a contentious political issue, with state leaders previously accusing oil companies of price gouging. However, this investigation reveals a more nuanced reality, highlighting the complex factors at play and the challenges the state faces in balancing climate goals with maintaining affordable and reliable fuel supplies.

The details

The investigation found that roughly 55% of the cost of each gallon of gas in California is made up of state-specific factors, including higher distribution and refining costs, the state's special gas blend requirements, taxes, and climate programs. Additionally, the closure of two major refineries has tightened supply, leading the state to increasingly rely on overseas refiners to make its specialized fuel blend, which can take weeks to arrive and creates new vulnerabilities. The oil industry argues that proposed regulatory changes could make it more expensive to continue refining in California, potentially incentivizing more outsourcing.

  • In 2023, California's supermajority Democratic legislature held a taxpayer-funded 'price gouging' special session.
  • More than two years later, state officials say they found no evidence of illegal price gouging.
  • Two major refineries, Valero in the San Francisco Bay Area and Wilmington Phillips 66 in the Los Angeles area, have shut down since the 2023 special session.

The players

Gavin Newsom

The Governor of California who began accusing oil companies of price gouging when gas prices last hit $6 per gallon.

Wade Crowfoot

California's Natural Resources Secretary who said the state identified factors behind price spikes but stopped short of blaming oil companies for price gouging.

Tolly Graves

Manager of the Chevron Richmond refinery who said profit caps ignore the volatility of the business and that 'those good months are the only way we make a profit.'

Brian Hubinger

Senior manager of Chevron government affairs who noted that production of California's special gasoline blend 'took billions of dollars of investment.'

Andy Walz

President of Chevron who said that if a refinery has an unexpected problem, 'that's going to spike prices, that's going to hurt Californians, and it's going to be three weeks before we can get resupply from somewhere else.'

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What they’re saying

“We've identified certain dynamics that were creating those price spikes.”

— Wade Crowfoot, California Natural Resources Secretary

“Those good months are the only way we make a profit... if you cap the good months but don't support the bad ones, it creates an unviable business.”

— Tolly Graves, Manager, Chevron Richmond refinery

“California is a tough place to do business for refiners.”

— Tolly Graves, Manager, Chevron Richmond refinery

“It costs us hundreds of millions a year just to stay in business. Things have to change for us to be willing to invest in a refinery in California.”

— Tolly Graves, Manager, Chevron Richmond refinery

“If a refinery has a problem they didn't anticipate, that's going to spike prices, that's going to hurt Californians, and it's going to be three weeks before we can get resupply from somewhere else.”

— Andy Walz, President, Chevron

What’s next

California has temporarily suspended a new price gouging law that would have capped how much oil companies can make during price spikes. Lawmakers are now weighing how to balance climate goals with the need to maintain a stable and affordable fuel supply.

The takeaway

This investigation highlights the complex factors behind California's high gas prices, moving the conversation beyond simply blaming oil companies for price gouging. As the state pushes towards a cleaner energy future, the key challenge will be ensuring fuel remains reliable and affordable in the meantime.