The California Gas Cap Is Bringing Gas Prices Up

The California Gas Cap Is Bringing Gas Prices Up

California’s gas-car phaseout brings turmoil to mom-and-pop gas stations

John Miller, an electrician in San Jose, Calif., on a recent weekday. He prefers to fill his Volkswagen Passat with gasoline, instead of paying $15 to $20 for a fill-up at a gas station. “I think it’s great when the government comes in and says, ‘Let’s make it cheaper and let you have a choice of how you’re going to get your gas,’” Miller said.Credit Dana Zzyzko for The New York Times

LOS ANGELES — When California regulators approved a program in June to bring the price of gasoline down to $2.50 a gallon, it seemed like an end to decades of relentless upward pressure on prices. But then, on a cloudy day in Midtown on Nov. 28, the first of the statewide restrictions on gas prices went into effect.

The move raised the price of the most commonly used fuel in America by about 7.5 cents: It reduced the size of the gallon and took away some of the tax credit from refineries that are the main source of gas.

When the new law went into effect, the average price of gas in most of the state’s biggest markets shot up almost 25 cents to $3.43 a gallon, according to AAA California, while many places saw smaller price increases. And prices have remained volatile with spikes and dips throughout California’s drought, which was in effect as early as Sept. 1.

The price changes have not gone so far toward the cap of $5.45 a gallon that California voters approved in 2000, but they are at least in part due to the regulations, with the price of gasoline now higher than it was before the new law was in place in a number of states, according to industry analysts.

“Our analysis is that the gasoline price is increasing because of these regulations,” said Jeffrey Krapfl, an analyst at IHS CERA, the research arm of the investment bank that predicted the cap would raise prices. “The regulations are bringing gasoline prices up.”

The new law is the latest sign that the national picture of the oil business is being fundamentally changed. After several decades of steady upward price pressures, the industry now faces a series of forces

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