California's $0.41 Gas Surcharge, and 17% of Supply Closing
Summary
California's own petroleum watchdog says drivers paid a 'mystery gasoline surcharge' averaging $0.41 a gallon above the rest of the country from 2015 to 2024 — $59 billion — and that most of it, $0.35 a gallon, is just industry margin in a market four firms already control 90% of. Now two refineries, about 17% of in-state gasoline production, are closing, and the state's own committee says demand will then top supply.
The problem: Californians paid a gasoline surcharge the state's watchdog put at $0.41 a gallon from 2015 to 2024, $59 billion. The approvals: the California Energy Commission confirmed it, most of it ($0.35 a gallon) just industry margin, in a market four firms control 90 percent of. Where it goes wrong: two refineries, 17 percent of supply, are closing. How it's caught: the CEC named it; whether it widens is still open.
The problem ·The problem is a price gap. California drivers pay more for gasoline than the rest of the country even after taxes, fees, and environmental programs are stripped out. The California Energy Commission's petroleum-oversight division put that 'mystery gasoline surcharge' at an average $0.41 a gallon from 2015 to 2024 — $59 billion.
The approvals ·The approvals are the state's own oversight. The Legislature created the Division of Petroleum Market Oversight to watch this market, and its 2024 report is the confirmation the surcharge is real. It also decomposed it: gross industry margins rose $0.35 a gallon relative to the rest of the U.S. since the surcharge appeared, roughly 85 percent of the total, in a market where four firms hold 90 percent of in-state refining capacity against 48 percent for the top four elsewhere.
Where it goes wrong ·Where it goes wrong is supply. The Assembly's utilities and energy committee says Phillips 66's Wilmington plant, closing by the end of 2025, and Valero's Benicia plant, closing by April 2026, are together about 17 percent of the state's gasoline production. With their loss by mid-2026, in-state demand will exceed supply, and the CEC projects four-firm control rises to 98 percent.
How it's caught ·How it's caught is the record itself: the CEC's own report names the surcharge and the concentration, and Benicia alone is about 9 percent of state gasoline. But no authority has shown the surcharge won't widen as capacity leaves.
The verdict: the state has documented a surcharge it calls mostly margin, in a market it calls an oligopoly, and is now watching that market lose a sixth of its supply. Fewer sellers and tighter supply pull the same concentrated market the wrong way.
Most of it is margin
The largest single piece of that surcharge isn't policy. Gross gasoline industry margins⧉ rose $0.35 a gallon relative to the rest of the U.S. since the surcharge appeared — roughly 85% of it. And the market that sets those margins is thin: four companies control 90% of in-state refining capacity, against 48% for the top four in the rest of the country.
View data as table
| Mystery gasoline surcharge | 0.4 | the average premium over the rest of the U.S. after taxes, fees, and environmental programs |
|---|---|---|
| Excess industry margin | 0.4 | the largest single share of the surcharge, per the DPMO's own decomposition |
Now the supply gets thinner
Two of those refineries are leaving. The Assembly's utilities and energy committee⧉ says Phillips 66's Wilmington plant (planned closure by the end of 2025) and Valero's Benicia plant (planned closure by April 2026) are together about 17% of the state's gasoline production, and that with their loss by mid-2026 in-state demand will exceed supply. The CEC projects the closures push four-firm control to 98%.
View data as table
| California, top four firms | 90% | in-state refining capacity controlled by four companies |
|---|---|---|
| California, after Phillips 66 L.A. closes | 98% | the DPMO's projection once the Los Angeles refinery shuts |
| Rest of the U.S., top four firms | 48% | four-firm concentration of crude oil refining capacity outside California |
- The CEC's petroleum-oversight division confirmed a 'mystery gasoline surcharge' averaging $0.41 a gallon from 2015 to 2024 — $59 billion — that taxes, fees, and environmental programs do not explain.
- Higher gross industry margins ($0.35 a gallon, about 85% of the surcharge) are its largest single share, in a market where four firms hold 90% of in-state refining capacity versus 48% for the top four in the rest of the U.S.
- The Assembly's energy committee says the Phillips 66 Wilmington and Valero Benicia closures remove about 17% of in-state gasoline production, after which demand will exceed supply — and the CEC projects four-firm control rises to 98%.
- Fewer sellers and tighter supply push the same concentrated market the other way; no state authority has yet shown the surcharge will not widen as capacity exits.
Surcharge and refining-concentration figures are the CEC Division of Petroleum Market Oversight's own numbers from its 2024 Annual Report (CEC-900-2025-001, October 2025); the ~17% supply share, Benicia's ~9% share, and the demand-exceeds-supply reading come from the California State Assembly Committee on Utilities and Energy's May 28, 2025 oversight background paper. Closure dates are the committee's statement of the companies' announced plans as of May 2025. The Wayback Machine's captures of both documents (September 21, 2026 and May 10, 2026) are linked in Sources.
Sources(2) ▾
- California Energy Commission, Division of Petroleum Market Oversight, Division of Petroleum Market Oversight, 2024 Annual Report (CEC-900-2025-001) (2025-10-01) — the confirmation of the 'mystery gasoline surcharge' at an average $0.41 per gallon over 2015-2024 ($59 billion), the finding that a $0.35-per-gallon rise in gross industry margins is its largest single share, and the four-firm refining concentration figures (90 percent in-state today, 98 percent after the Phillips 66 Los Angeles closure, 48 percent in the rest of the U.S.) energy.ca.gov · original document
- California State Assembly Committee on Utilities and Energy, Oversight Hearing Background Paper: Outlook for California's Transportation Fuels Sector (May 28, 2025) (2025-05-28) — the committee's finding that the Phillips 66 Wilmington (planned closure by end of 2025) and Valero Benicia (planned closure by April 2026) refineries together are about 17 percent of the state's gasoline production, that Benicia alone is about 9 percent, and that with their loss by mid-2026 in-state demand will exceed supply autl.assembly.ca.gov · original document
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Californians pay more for gasoline than the rest of the country, and the state's own watchdog can't pin most of it on taxes. The California Energy Commission's petroleum-oversight division⧉ says a 'mystery gasoline surcharge' averaged $0.41 a gallon from 2015 to 2024 — $59 billion — even after subtracting taxes, fees, and environmental programs.