Below are the monthly updates from the most current June 2025 fuel price data (GasBuddy.com) and April 2025 electricity and natural gas price data (US Energy Information Administration). To view additional data and analysis related to the California economy visit our website at www.centerforjobs.org/ca.

California average prices for commercial and industrial natural gas worsened compared to the other contiguous states, while the other rankings were unchanged. California again had the highest costs (12-month moving average) for all end user electricity rates, gasoline, and diesel.

While the data below reflects June prices, state actions to raise the cost of fuels took hold on July 1. State excise tax was raised on both gasoline (1.6 cents) and diesel (1.2 cents). With this latest increase, the gasoline excise tax has been increased by 106% since 2017, and the diesel excise tax by 29.4%.

The Air Board’s Low Carbon Fuel Standard (LCFS) changes also went into effect in July, but at least in the initial week have yet to show a significant effect on fuel prices. Using the daily prices from the Automobile Association, the spread between California and US gasoline prices in the first week of implementation has been relatively consistent at about $1.40 a gallon. The spread for diesel, however, has shown a slight increase from $1.42 at the end of June to $1.46 in the most recent results. In both cases, these are very initial reads that are still far too preliminary to show any definite trend. Aviation fuel prices, which will also be affected by LCFS, are not tracked in this data source.

These results likely reflect two factors. First, there is a substantial excess inventory of available credits. As this supply is worked down, prices are likely to show a stronger rise. Second, carbon markets in general have been soft recently, largely in response to increasing uncertainty over the future direction of the underlying regulations in the US and other countries. This factor in particular affected the LCFS credits due to uncertainty over the Air Board’s regulation package, along with continuing uncertainty over the future of the state’s Cap & Trade program as it moves from being a climate change program to just another revenue source to offset the state’s rising budget deficits.

Using the Air Board monthly results, the underlying LCFS credit prices have overall been declining in recent months and took a steep dip in June during the administrative tolling period for the Air Board’s regulations. The June results just posted the lowest credit price since 2015.

Credit volume, which had been trending up, similarly showed a sharp drop in June.

The LCFS cost component in both gasoline and diesel prices consequently began from a relatively low point at the end of June, with the OPIS estimate of the LCFS component roughly back to levels last seen in summer 2024. The new LCFS regulations, however, still had an effect. Applying the Air Board’s new requirements and carbon intensity values, the OPIS calculations saw the LCFS per gallon estimates jump by over 50% on the first day of implementation alone. As increases at this level work through the system and as the credit market recovers as the backlog of credits is reduced, Californians are still likely to see significant price increases in the coming months.

The earlier price signal in diesel also reflects current market conditions. Nationally and globally, diesel production is struggling to rebuild stocks with current expectations that tight supplies will lead to much higher transport costs for food and other goods later this year. California’s LCFS addition to this price pressure would consequently accelerate this likely source of inflation within the state.

The extent of the overall LCFS cost pass-through for both gasoline and diesel (and aviation fuels) remain to be seen. Air Board staff continue to insist their rules will not have a major effect on prices. The occasional academic commentor given space in articles on this and similar cost issues—such as the one found by LA Times to comment on the currently tolled climate superfund bills—insist that market participants attempting to raise prices to incorporate this type of cost would be undercut by others willing to step in with alternative supplies. These arguments, however, fail to reflect California conditions in many respects.

First, the alternative supplier hypothesis is likely true for fully functioning markets. But California’s fuel markets are not fully functioning. They are heavily restricted by what fuels can be sold, and further isolated from national and global supplies by the absence of required transportation capacity and high regulation-driven costs of using what capacity does exist. California’s market instead has been altered and repeatedly revised by regulation to almost ensure that such costs will be passed on in order to maintain the economic survival of what supply does remain to service the state.

Second, this hypothesis assumes there is someone available to provide additional supplies. There is not. Any such supplier would still be bound by the added costs of LCFS, California formulations, Cap & Trade, and the other state-imposed additions to selling these products in the state. What supplies that are available primarily now come from Singapore, Japan, and South Korea, all of which are many weeks of tanker time removed from California and none of which produce in amounts capable of serving California’s needs. And even when the supply is available, the question still remains of which supplier would be willing to risk exposing themselves to the potential of future liabilities such as represented by the climate change superfund proposals that remain alive as two-year bills?

In June, total LCFS Cap & Trade charges incorporated in the price Californians pay for fuel eased due to the factors discussed above, while the Cap & Trade component was unchanged. The costs shown in the table are for the penultimate month-to-date numbers from the OPIS Carbon Market Report, adjusted to incorporate state and local sales tax to account for the full additional costs imposed by these regulatory fees on fuel buyers. Certain Data or Information Provided By: Oil Price Information Service, LLC. Distribution of OPIS data without permission from OPIS is prohibited.

Combining the OPIS data (without the sales tax component) with the previous Energy Commission estimates, Cap & Trade costs have been easing, while LCFS costs had been rising before the sharp dip in June. Note that both charts include both the Cap & Trade components charged at the rack and levied on production in the OPIS data, and only the rack component in the Energy Commission data.

Average prices ($ per thousand cubic feet; 12-month moving average) for the 12 months ended April 2025 and changes from the previous 12-month period for each end user: