Gas prices and policy: Newsom signs E15 law as state expands market oversight

Newsom approves E15 fuel blend

Governor Newsom signed Assembly Bill 30 (AB 30) on October 2, 2025, immediately allowing the sale of E15 fuel, which is gasoline blended with 15% ethanol. This new law aims to boost market competition and reduce pump prices for California drivers.

A study by UC Berkeley projected that this blend could save consumers up to 20 cents per gallon. This action makes California the 50th state to authorize E15, helping diversify the fuel supply and giving drivers more choices to fight high price spikes.

Projected $2.7 billion annual savings from E15

The new E15 fuel option is expected to save consumers a substantial amount of money, with total statewide savings anticipated to reach $2.7 billion annually. The fuel is safe and is already approved by the U.S.

EPA for use in most modern cars, specifically vehicles made in model year 2001 and newer, covering approximately 96% of the state’s cars. This cheaper, cleaner-burning fuel choice will increase the overall fuel supply and lessen California’s high dependency on its small number of local refineries.

California gas price stands at $5.80 in October 2025

In mid-October 2025, AAA reported California’s average at about $4.66/gal and the U.S. average at about $3.10/gal, though prices fluctuate day-to-day.

The significant price difference of over $2.00 per gallon is the primary reason the Governor continues to take decisive action against the oil industry. Newsom argues that this considerable gap is often unfair and requires direct state oversight, rather than relying solely on normal costs or taxes.

DPMO begins monitoring excessive refinery profits

To fight high prices, the Division of Petroleum Market Oversight (DPMO) became fully operational in 2025, collecting data under the new law, SBX1-2.

DPMO-tracked gross gasoline refining margins exceeded $1/gal during the 2022–2023 spikes, far above long-term norms, prompting the establishment of the new oversight regime.

The division’s job is to prevent oil companies from price gouging by closely monitoring profit thresholds and gathering evidence for potential future penalties.

Gas prices exceeded $6.00 per gallon in late 2024

The state took action because California’s record statewide average was roughly $6.50/gal on June 14, 2022.

This price surge occurred despite the main price for crude oil being relatively low, below $90 per barrel. This event firmly prompted the legislature to enforce the penalty law, allowing the state to exert more control over the unpredictable fuel market.

Refining margin grew to $2.00 per gallon in 2024

The profit that refiners make from turning crude oil into gasoline reached almost $2.00 per gallon during the peak price periods in 2024.

This is nearly four times higher than the typical profit margin before the pandemic, which was approximately $ 0.15 per gallon. This vast difference is the most crucial fact that Governor Newsom used to prove there was market manipulation, making a penalty system for excessive profits necessary.

Governor signs penalty law SBX1-2 in March 2023

To address the high profits, Governor Newsom signed Senate Bill X1-2 (SBX1-2) into law in March 2023, following a special legislative session.

This law grants the California Energy Commission (CEC) the authority to accept oil refiners if their profits are deemed excessive. This is the first measure of its kind in the entire nation, explicitly designed to stabilize the state’s fuel supply and ensure gas prices match the actual costs.

Chevron reported $11.2 billion profit in 2022 quarter

The Governor’s political push to regulate the oil industry was fueled by the massive profits reported during the 2022 gas price crisis.

Chevron, one of the leading companies supplying fuel to California, reported an astonishing $11.2 billion in profit for the third quarter of 2022.

Newsom used this specific number as proof that companies were making huge profits while everyday people were stuck paying the highest gas prices the state had ever seen.

Newsom called special session in December 2022

Following the extreme price spikes, Governor Newsom took a significant step by calling a special legislative session in December 2022 to expedite the passage of the penalty bill.

He directly challenged the issue of market power, noting that only major refiners control the gasoline supply in California. The Governor’s attempts to have simple talks with oil industry leaders failed to get them to lower prices voluntarily or be more transparent about their costs.

State record price hit $6.44 per gallon in June 2022

The highest average price for regular gasoline in California’s history was recorded at about $6.44 per gallon in June 2022. This peak price was over $2.50 per gallon higher than the national average price at that time.

These record-breaking costs immediately accelerated the state’s political efforts to find a solution, including the creation of a penalty framework and new price transparency rules aimed at protecting consumers from future unpredictable spikes.

Five refiners control 98% of state gasoline supply

California’s gas market is highly concentrated, with only five major refineries producing nearly all of the state’s finished gasoline, accounting for approximately 98% of the supply.

This lack of competition makes the market highly fragile and susceptible to shocks. When just one refinery experiences a problem, the limited number of competitors quickly allows the remaining refiners to sharply increase prices, sometimes by as much as 50 cents per gallon in just a few days.

Maintenance shuts down 10-30 cents per gallon

Maintenance periods at refineries, whether planned or unplanned, cause immediate price increases because California cannot easily import its unique fuel blend from other sources.

The state has a total of 14 refineries, but the largest ones primarily have the capacity to produce gasoline. Historically, any major shutdown has caused pump prices to jump between 10 and 30 cents per gallon almost instantly, as the available supply becomes restricted.

CARB fuel adds 15 to 20 cents per gallon cost

California requires the use of a special, clean-burning gasoline, known as CARB-mandated fuel, to meet its strict air quality rules. This unique blend is more difficult and expensive to produce than the standard gasoline used across the United States.

This special requirement is a constant factor that adds between 15 and 20 cents per gallon to the price compared to national averages, regardless of market conditions or crude oil costs.

State taxes and fees total $1.09 per gallon in 2025

As of 2025, state taxes and fees are approximately $0.90/gal, and California’s LCFS/cap-and-trade programs add around $0.54/gal, for an estimated combined burden of approximately $1.44 per gallon, according to EIA-based breakdowns.

This includes the state’s central gasoline excise tax, which is currently approximately $0.58 per gallon and is adjusted annually for inflation. These taxes are an essential source of funding for road and bridge projects.

Newsom cited 84 cents per gallon jump in 10 days

In a public release issued in September 2022, Governor Newsom strongly criticized the oil industry’s actions. He stated, “We’re not going to stand idly by while greedy oil companies fleece Californians.”

He pointed to a specific, unexplained price jump of 84 cents per gallon that happened over a short 10-day period that month. This volatility led him to believe that the market was failing and required direct government intervention through the new penalty law.

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Global crude oil price determines half of final cost

Despite state actions, global events still determine approximately 50% of the final gasoline price, according to the U.S. Energy Information Administration (EIA).

EIA’s October 2025 outlook placed the 2025 Brent average near $68–69/bbl; daily spot prices fluctuated and briefly dipped into the low $60s that month.

Any major global event, like a change in production by OPEC+ or political conflicts, has a massive and immediate impact on the worldwide price of crude oil, affecting all 38 million drivers in California instantly.

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This slideshow was made with AI assistance and human editing.