Ready for a summer road trip? Here's why a visit to the gas pump could cost you more in July

Los Angeles Times

25-06-2025

Bad news if you are planning a road trip this summer.
Gas prices at the pump in California will likely jump in July, the result of a state sales tax hike and stricter rules on refineries to encourage them to create lower-carbon fuels. The combined increases could boost gas prices by nearly 70 cents, although industry experts said they can't estimate the exact price of a gallon of gas for next month.
Californians and drivers nationwide typically see a spike in fuel prices during the month of June but the oil supply market is currently outweighing demand, leading to slightly cheaper prices compared to 2024, according to the American Automobile Assn.
As of Wednesday, the current average for the state is $4.64 per gallon compared to $4.81 on the same day last year, a 17-cent decrease.
Even though forecasters predict global oil inventories will increase over the next five months, relieving pressure on oil prices, California consumers won't feel the expected continued reprieve next month.
On July 1, California's gas and diesel excise tax will increase to 61.2 cents per gallon, from the current rate of 59.6 cents per gallon, according to the California Department of Tax and Fee Administration. Diesel fuel will also increase from 45.4 to 46.6 cents per gallon.
The state adjusts its fuel tax rates based on data from the Department of Finance annually and the new rate goes into effect on July 1 of each year.
This isn't the only factor that will drive up gas prices this summer.
In 2024, California Air Resources Board approved amendments to the state's Low Carbon Fuel Standard program that was established in 2011 with two goals in mind: shifting the state's fuel dependence toward lower-carbon fuels and helping the state reach the goal of cutting fuel use by 49% by 2045.
The approved amendments are meant to incentivize the value of lower-carbon fuel and impose stricter limits on carbon intensity fuels so gasoline producers are encouraged to create less-polluting fuels.
But that extra cost to comply with the new regulations will be passed onto motorists at the pump.
Last year, CARB estimated the amendments could raise gasoline prices by 47 cents a gallon, or $6.4 billion a year. Months later the agency walked back its estimate and said it would not provide the public with a revised one.
The agency previously told The Times that no new numbers will be forthcoming because 'what we are not equipped to do is analyze what the effect would be on retail gasoline prices,' it instead analyzes economic growth, job creation and public health.
Danny Cullenward, vice chair of the California's Independent Emissions Market Advisory Committee, estimated that near-term affects from the program amendments on gas prices could be an additional 65 cents a gallon this year, $0.85 per gallon by 2030, and nearly $1.50 per gallon by 2035.
AAA said it doesn't have an estimate yet on how the amendments to the Low Carbon Fuel Standard program will affect gas prices next month, 'especially with the recent drop in oil prices.'
'If those stay low, the impact could be smaller,' said Gianella Ghiglino, spokesperson for AAA of Southern California.
Drivers won't be able to avoid the price hike at the pump in California but there are ways to locate gasoline stations with the cheapest prices.
There are several apps and websites that can help you find lower prices near your traveling route.