California Pays Significantly More State Gas Tax Than DeSantis's Florida

California Gov. Gavin Newsom and Florida Gov. Ron DeSantis have been poking at each over in the media over the past several months, with Florida’s Governor appearing to get the best of Newsom and his gel-laden and coiffed hair.

The mic drop:

"So the Governor of California sent a letter to the Department of Justice saying, 'You need to prosecute Texas and Florida governors'. And all I say is, I think his hair gel is interfering with his brain function, Gov. DeSantis said.

Gov. Newsom has continued to call for a live national debate between him and DeSantis, but it doesn’t appear DeSantis will give him the time of day.

Newsom is pivoting away from his little media feud with DeSantis and is now blaming the rising gas prices onthose “greedy oil companies” that are stealing from everyday Americans.

“Here are the facts: Crude oil prices are DOWN. And yet…gas prices are up. That’s because greedy oil companies are ripping you off,” stated Newsom. “They are raking in record profits at your expense. I’m calling for a new tax on these corrupt oil companies to put money back in your pocket.”

Newsom is right. The price of crude oil is “DOWN,” but prices are falling around the nation, except in California, and Newsom’s solution is to tax the “corrupt oil companies.,” who are driving up the price of gas at the pump.

While Newsom calls for a new tax against oil companies, DeSantis has pushed for a statewide gas tax holiday.

Speaking of taxes, the reason why Californians pay so much more for their gas is because of the astronomical gas taxes Newsom has levied on them.

Just how much more are Californians than Floridians?

While both states pay the 18.4% federal gas tax imposed on all states, California assesses 56.6% gasoline taxes, which is 23.2% for then Florida.

Florida has higher state gas taxes than most states, but a lot less than California and Pennsylvania. Pennsylvania has the highest in the nation, edging out California by 1%.

So what is driving the cost of a gallon of gasoline in California?

A recent survey by Stillwater Associates breaks it down.

In California, the current gasoline taxes and fees applied to gasoline are:

1. Federal Excise Tax – This includes an 18.3 cpg component for the Highway Trust fund and an 0.1 cpg component for the federal Leaking Underground Storage Tank Trust Fund.

2. California State Excise Tax – This tax revenue is deposited into the State Transportation Fund. In 2017, the state legislature passed Senate Bill 1, the Road Repair and Accountability Act of 2017, which raised the excise taxes on motor fuels effective November 2017 and provided to inflation adjust the tax rate. The current excise tax rate is 50.5 cpg.

3. Sales Tax– Sales taxes are applied to the price of gasoline similar to but at a lower rate than general sales taxes. The sales tax rate in any given location includes county, transit, and local sales taxes in addition to the state sales tax.

4. Underground Storage Tank Fee (UST)– UST is used to provide revenue for the state’s Underground Storage Tank Cleanup Fund. The primary purpose of the fund is to provide financial assistance to the owners and operators of underground storage tanks to remediate conditions caused by leaks, reimbursement for third-party damage and liability, and assistance in meeting federal financial responsibility requirements. The current CA UST tax rate is 2.0 cpg.

5. Fuels Under the Cap (FUC)– This is part of California’s Cap & Trade (C&T) program that requires fuel suppliers to purchase Allowances (basically a license to emit a ton of greenhouse gas (GHG)) to offset the GHG from the combustion of the fuel. This fee will vary with the price of C&T Allowances. This provision was applied to gasoline in 2015. At recent C&T allowance prices, this corresponds to 14.3 cpg.

6. Low Carbon Fuel Standard (LCFS)– This program that began in 2011, requires suppliers of high carbon intensity (CI) fuels, like the petroleum portion of gasoline, to purchase credits from suppliers of low-CI fuels such as ethanol, biodiesel, renewable diesel, renewable natural gas, and electricity. Through 2015, the cost of the LCFS was low, but as the price of credits has increased and the LCFS standards have tightened, the costs have become more significant. This fee will vary with the price of LCFS Credits and will increase as the annual LCFS standard is scheduled to become more stringent through 2030. At recent LCFS credit prices, this amounts to 22.6 cpg.

The survey concludes that Californians pay a total of $1.185 in taxes and fees.

Florida can do better in cutting the state gas tax.

Interestingly enough, hair gel profits have risen 4.37% CAGR in 2022.