California’s energy regulator is keeping a close watch on the state’s gasoline market for potential price gouging as the Iran war spikes oil and fuel costs around the globe.
Some gas stations are charging as much as $8 a gallon, “extraordinarily high prices” that are out of line with crude oil and gasoline futures prices, the Division of Petroleum Market Oversight said in a press release on Thursday.
Drivers in the golden state currently pay an average $5.66 for a gallon of gasoline, about a dollar below the all time high set in 2022, according to the American Automobile Association. That 2022 price spike ushered in a wave of regulation aimed at California’s refining and fuels industry, including establishing the DPMO.
Fuel sellers engaging in unfair or anticompetitive practices will be referred for prosecution if necessary, the watchdog said.
“Reports of price gouging will be taken seriously and DPMO is already engaging with gasoline retailers whose high prices may not be justified by increases in their input costs,” the agency said in a public notice.
The notice comes as California’s oil industry is pulled into the national spotlight with a contested oil drilling project getting the green light by the Trump administration in an effort to try to increase supply and tamp down spiraling energy costs.
The cost of living is a key issue headed into midterm elections and a potential headache for Republicans, with President Donald Trump’s war on Iran stoking energy inflation that threatens to spill over into the wider economy.
California Governor Gavin Newsom is expected to make a run for president in 2028. Newsom and Trump’s Energy Secretary, Chris Wright, have been sparring on social media about who is to blame for national US gas prices sitting at the highest level since 2022.
Governor, California has strangled its own oil and gas production as well as its refinery capacity, driving up CA energy prices to 40% higher than the country as a whole — 100% higher in the case of electricity prices. California imports the majority of its oil from overseas,… https://t.co/WQyTVCQ25x
— Secretary Chris Wright (@SecretaryWright) March 16, 2026
Two fuel-making plants in California have closed in the last six months — Phillips 66’s Los Angeles refinery and Valero Energy Corp.’s Benicia plant near San Francisco amid a tough regulatory environment in the state.
The state has grown more reliant on imports with domestic refining capacity and oil production dwindling. Several projects slated to pipe fuel into the region from as far as Texas and the Midwest are yet to reach a final investment decision.
The California energy regulator has urged drivers to shop around for unbranded gasoline that can be significantly cheaper than branded varieties.
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