Two Democratic candidates running for California governor are pushing to suspend the state’s fuel tax or ease refinery regulations as gas prices across the state hit $5.52 per gallon — the highest in the nation.
San Jose Mayor Matt Mahan and former Los Angeles Mayor Antonio Villaraigosa are the only two Democrats in the race calling for rollbacks to California’s oil and gas regulations. Their proposals come as the ongoing U.S.-Iran conflict continues to rattle global oil markets and push pump prices higher for California drivers.
According to the Los Angeles Times, the national average for a gallon of regular gasoline currently sits at $3.71 — up sharply from last month’s average of $2.92. California’s average is more than 50 cents higher than any other state, driven by a combination of strict environmental fuel standards and a heavy reliance on imported crude oil.
In 2025, 61% of oil processed at California refineries came from foreign sources, including Brazil, Iraq, and Guyana, while only 23% was produced within the state, according to data from the California Energy Commission (CEC). That dependence on foreign oil has left California especially vulnerable to disruptions caused by global conflicts.
Mahan, who posted a video outside a gas pump on social media, said the costs are “becoming an emergency for working families, and I think we ought to act like it.” He called on state lawmakers to suspend California’s gas tax — currently 61 cents per gallon, the highest in the nation — “for the duration of the war” in Iran, or for as long as prices remain above $5 per gallon.
California’s gas tax was established under Senate Bill 1 in 2017, signed by then-Governor Jerry Brown. It was the state’s first gas tax increase in 23 years and was designed to fund road and bridge repairs. The tax increases each year on July 1, tied to growth in the California Consumer Price Index.
Villaraigosa called for an “immediate moratorium” on regulations he said are “overburdening” California refineries and working families. “These failed policies are not only hurting tens of millions of Californians, they are terrible for the environment because they have forced California to depend on imported foreign oil from the Middle East,” Villaraigosa said in a statement. If elected governor, he said he would “reform and overhaul” the California Air Resources Board, which administers many of the state’s environmental rules.
Meanwhile, California’s 2023 price-gouging law — signed by Governor Gavin Newsom and celebrated as a tool to rein in big oil profits — has yet to be used. The CEC, which was granted authority to cap refinery profit margins under that law, voted on Wednesday (August 29) of last year to delay those rules for five years. The delay was aimed at preserving “investor confidence” and keeping major refiners like Valero and Phillips 66 operating in the state.
Jamie Court, president of Consumer Watchdog, argues that Newsom “panicked” and left the state without the tools it needs during the current crisis. “These are the moments we need them,” Court said, referring to the dormant profit-cap rules.
UC Berkeley energy economist Severin Borenstein offered a cautionary counterpoint, warning that aggressive regulation could trigger supply shortages. “As much as people don’t like high gasoline prices, they really, really hate gas lines,” Borenstein said. Zachary Leary of the Western States Petroleum Association argued the core problem is the loss of 17% of the state’s refining capacity.
Democratic lawmakers, who hold supermajorities in both the state Senate and Assembly, have continued to block proposals to pause the gas tax, citing the need to fund road maintenance. Assemblymember Cottie Petrie-Norris (D-Irvine), who chairs the Assembly Utilities and Energy Committee, pushed back sharply on the idea. “If anyone has a proposal about how to backfill revenues, I’m up for that conversation, but so far, it’s just a bulls— political talking point,” she told the Los Angeles Times.
Petrie-Norris acknowledged the tension voters feel between affordability and environmental goals. “When I ask people, ‘Do you want affordable gas, clean air or safe roads?’ they say yes,” she said. “We’ve got to be honest with Californians about trade-offs so that we can have real conversations.”
Mahan rejected the argument that suspending the tax would hurt road funding. “The truth is we have the highest taxes in the country and a $350-billion budget, and we ought to be able to pave our roads and enable working families to put food on the table,” he said.
Republican candidates in the governor’s race have also proposed price-relief measures. Former Fox News host Steve Hilton outlined a plan to bring California gas prices down to $3 per gallon by slashing regulations, including the low-carbon fuel standard. Riverside Sheriff Chad Bianco, the other major Republican candidate, also supports suspending the gas tax.
Looking ahead, analysts warn that if the Strait of Hormuz remains closed due to the conflict, prices at some California stations could approach $10 per gallon. The CEC retains the authority to rescind its five-year delay on profit-cap rules, and advocates are pushing for the agency to act sooner. The state is also exploring longer-term solutions, including converting closing refineries into fuel import terminals and studying a “Western Gateway Pipeline” that would bring cheaper gasoline in from the Midwest.
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