When You Regulate the Builders Out, You Get $8 Gas — Not Abundance

Last week I wrote about pensions. This week I want to write about gas — because on May 28, twenty-three days from when this column hits doorsteps, the California Air Resources Board is going to vote on a set of amendments to the Low Carbon Fuel Standard that, by the state’s own analysis, could add up to another dollar to the price of every gallon you pump. And almost nobody outside Sacramento is talking about it.

Let me tell you what is already true, before that vote even happens.

The average price of regular gasoline in California is $5.82 a gallon. The national average is $3.97. Now, I want to be precise about what is and is not driving that gap, because Sacramento is counting on you to be imprecise. Yes, there is a war scare in the Persian Gulf. Yes, the Strait of Hormuz situation has tightened the global crude market and pushed prices up everywhere. But the Hormuz risk hits every state in the union equally. North Dakota drivers do not get an Iran discount. Texas drivers do not get an OPEC discount. The reason a Californian pays nearly two dollars more per gallon than an Iowan has nothing to do with Tehran and everything to do with Sacramento.

Here is where that two dollars actually comes from. Roughly $1.21 of the gap traces directly to the closure of two refineries: Phillips 66 shut down its Wilmington plant on October 17 of last year, taking 140,000 barrels a day of in-state processing capacity off the map, and Valero closed its Benicia refinery at the end of January, four months ahead of its original schedule. Between them, California has lost something on the order of one in every five gallons of refining capacity it had in 2024. The remaining gap is California-only excise taxes, California-only cap-and-trade pass-throughs, the California-only Low Carbon Fuel Standard, and a California-only summer-blend gasoline requirement that no other state demands.

Both companies were clear about why they left. High operating costs. A regulatory environment that, in their words, made it impossible to plan a five-year capital project, much less a fifty-year one. These are not radical libertarian think tanks. These are oil companies — companies that exist to refine oil, in the place that historically refined more oil than almost anywhere else in America — telling the state’s lawmakers that the rules have made the work impossible.

And on May 28, the response Sacramento has prepared is to make the rules stricter.

I’m going to ask you to hold a picture in your head. Hemet is forty-five miles from Riverside. It is seventy miles from downtown Los Angeles. It is ninety-five miles from Long Beach. The men and women who live in our valley and commute to those places — the warehouse workers in Moreno Valley, the trades workers on jobsites in Corona, the nurses driving to Loma Linda, the teachers in Banning — are not making the kind of money that absorbs an extra dollar a gallon without flinching. A household with two cars and a thirty-mile-each-way commute burns roughly twenty-five gallons a week. A one-dollar increase is thirteen hundred dollars a year. Stack that on top of a $5.82 starting point, and you are not asking working families to “do their part.” You are reaching into their kitchen budget and taking it.

State Senator Brian Jones has cited internal projections that California gas could hit $8.43 a gallon by the end of 2026 if refinery closures continue and the new LCFS amendments take effect. I’ll grant that $8.43 is a worst-case number. I’ll grant that no projection is destiny. What is not in dispute is the direction of travel.

Now layer this on top of what we already know about Sacramento’s books. The state is running a structural deficit somewhere between $20 billion and $35 billion a year. It has racked up roughly $125 billion in general fund deficits over the last four years. The Legislative Analyst’s Office — not Fox News, not the Hoover Institution, the Legislature’s own nonpartisan auditors — recently warned that the Governor’s budget is leaning on AI-driven tax revenue projections that they consider unrealistic. We are, in plain English, broke. And the legislative response to being broke has been to make it more expensive to drive to work.

This is the part where the word “abundance” stops sounding like an aspiration and starts sounding like an indictment. Every prosperous society in human history got that way the same way: by letting its builders build under predictable, evenly enforced rules. Refineries are builders. Power plants are builders. Housing developers are builders. Truck drivers and farmers and warehouse operators are builders. When you make every one of those jobs harder, more expensive, and more legally fraught — when the rules apply only to the people who follow them and the people who don’t get a waiver — you do not get a clean, prosperous future. You get a brittle one. A state where a single Strait of Hormuz incident or a single refinery fire sends prices into orbit because there is no slack left in the system.

Here is what I am asking. Between now and May 28, pick up the phone three times.

Look up your own state senator and assemblymember at the Legislature’s official tool — findyourrep.legislature.ca.gov — and call both offices. Then call the Governor’s constituent line at (916) 445-2841. The Governor is the one who appoints the members of the Air Resources Board, and the Air Resources Board is the body that will take this vote.

Tell each of them, by name, that you are watching the LCFS vote, and that you will remember it. Tell them that you have already lost two refineries and you are not interested in losing a third. Tell them you live in a part of the state where people drive for a living and a dollar a gallon is not an abstraction.

The future of abundance that producers produce is still on the table. We just have to stop voting against it.