Brittany Bernstein gives a preview of coming attractions in the National Review column “California Gas Prices Are Out of Control — and They’re About to Get Worse” (behind NR’s paywall). Bernstein begins with the widely reported projection by USC Marshall School of Business Professor Michael Mische in his March 2025 paper “A study of California gas prices.” This should do wonders for presidential wannabe Gavin Newsom’s nascent campaign:
California gas prices could jump to $8 per gallon in 2026 thanks to the planned closure of two oil refineries in the state, according to an estimate by the University of Southern California.
Valero’s Benicia Refinery near San Francisco and Phillips 66’s Wilmington Refinery near Los Angeles are both slated to close in the coming year.
In explaining the company’s decision to close its Benicia refinery, Valero CEO Lane Riggs said on an earnings call that California’s tough “regulatory enforcement environment” was the main factor driving the closure of the state’s sixth-largest refinery.
The April announcement came six months after regional and state air regulators fined the company $82 million for exceeding toxic emissions standards for more than 15 years.
Meanwhile, Phillips 66 announced the closure of its Los Angeles refinery, the seventh largest in the state, just 72 hours after California passed ABX2-1, which requires refiners in the state to hold additional inventories of finished gasoline stock. The company attributed the closure not to any specific California policy but due to “long-term uncertainty” around the future of the refining business in the state.
And Chevron announced last year it would move its headquarters out of San Ramon, Calif., to Houston, Texas, because it was becoming increasingly difficult to do business in the Golden State.
Bernstein then turns to Professor Mische himself:
“We have legislated ourselves into a situation where the costs are extraordinarily high and the political environment is extraordinarily harsh,” said Michael Mische, a professor in the practice of management and organization at USC who authored the paper predicting $8-per-gallon gas.
“So the refiners, I think, got to the point where they just said, ‘Enough is enough. We can’t operate under these conditions.”
Experts are predicting dire consequences; the two refineries represent almost 20 percent of in-state gasoline production, or around 6 to 6.2 million gallons of gasoline per day.
Why do Californians put up with this?
Already, California gas prices regularly sit 40 percent higher than the U.S. average, a difference attributable to “supply issues, the CA special blend of gasoline (which is only sold in California) and a layering of taxes and fees on the shoulders of consumers,” according to Mische.
California Governor Gavin Newsom, for his part, has blamed fossil fuel companies for the state’s high gas prices, saying the firms have been price gouging for a long time. “They’re screwing you,” Newsom said in October. “They’ve been screwing you for years and years and years. There’s no other way to put it.”
Newsom to the contrary notwithstanding, I can think of a few other ways to “put it.” In fact, one might reasonably respond put it where the sun don’t shine. Newsom’s demagogic inanity raises the question why they’re not “screwing you” in the California fashion all across the United States.
Bernstein elicits a response to Newsom from Professor Mische. He tactfully raises the question who’s screwin’ who?
Mische disputes Newsom’s claims, finding in his recent research that the state’s high gas prices are “self-inflicted.” His study of 50 years of gas prices found no widespread evidence of price gouging, either by gas station owners or refiners or oil producers in the state.
“It is [apparent] that policymakers are trying to use regulations, taxes, and fees to drive up the costs of gasoline and force California consumers into EVs,” he told NR.
The 2035 mandate banning the sale of gas-powered cars “created the coffin” for refiners, and then a series of regulatory actions afterwards, including a requirement that refiners must maintain an inventory of gasoline stock and report to a Department of Petroleum Market Oversight, were the final nails in the coffin, Mische said.
“I think the refiners have just been throwing their hands up in the air and saying if we’re out of here in 2035, we might as well get out of here now, there’s no use putting hundreds of millions of dollars into this.”
California, here we go!
