Why Is Gas Still So Expensive in California?

As of today, it’s averaging below $3 a gallon in every other state.

A cyclist rides by a sign at a gas station in Los Angeles posting the latest gas prices on Friday, Feb. 27, 2015. (Nick Ut / AP)

Gas prices have been falling across the U.S.: According to the American Auto Association’s daily fuel gauge report, average national prices are the lowest they’ve been since 2004. In two states, prices have fallen to less than $2 per gallon:

But those low prices have been slow to hit the West. Part of the explanation is transport costs—refineries are more spread out in the West—which explains why Alaska currently has the most expensive gas prices in the country. But why California is number two in this regard, as opposed to Hawaii, which is arguably harder to get things to, is a different story.

California’s traditionally high gas prices are attributed to local taxes and fees—among the highest in the country—as well as state regulations regarding a special low-pollution blend, which means stations get their supply only from certain refineries. In Southern California, a damaged Exxon Mobil refinery (it had an explosion earlier this year) has also decreased already limited supply in the area—leading to higher prices. There have even been accusations of price gouging.

The price of crude oil in the international market has fallen significantly in the last year due to a global price war. But U.S. gas prices have not fallen as much, and some experts say that’s because of a regulatory premium—which means that for Californians solving the supply problem might only do so much.