You may think that gas prices are pretty high in North Carolina, but in California, they’re averaging $4.66/gallon, which is $0.25 higher than Hawaii, the state with the next highest average, and almost a full $1 more than North Carolina’s $3.70 average. To see just how dramatic the situation in California is relative to the rest of the country, check out this map.
So what is going on in California? Why is the entire state bright red, unlike anywhere else in the country? Matthew DeBord offers a good explanation of how regulation is causing this pressure on prices. Essentially, since California has it’s own environmental standards for gasoline, the state is a closed market. They can’t use gas from other parts of the country. And that means, when a refinery or a pipeline is knocked out due to a heatwave or a fire or anything else, it’s difficult for the system to absorb the changes in supply. Those shocks end up getting passed directly to consumers in the form of higher prices at the pump.
It’s yet another example of the unintended consequences of over-regulation and its negative impact on consumers.