"I DID THAT!"
As the Iran war entered its third month, a sticker bearing the image of U.S. President Donald Trump was affixed to a gas pump at a filling station in Santa Clara, California, on Tuesday. On the sticker, Trump's finger points to the fuel gauge. A resident filling up had used it to sarcastically suggest that the president is responsible for the surge in gasoline prices. At major oil company gas stations across Silicon Valley, including Santa Clara, regular gasoline is selling for around $6 per gallon.
With such staggering prices displayed on fuel gauges decorated with Trump stickers, public opinion in the United States has soured over high oil prices. Trump said he would maintain a maritime blockade against Iran until Tehran agrees to a deal that addresses U.S. concerns over its nuclear program. That means high oil prices could persist. According to an average of major polls compiled by The New York Times on the 28th of last month, disapproval of Trump reached 58 percent, the highest since the second-term administration took office.
When oil prices rise, households tend to cut back on grocery spending. This trend is even more pronounced among low-income households that bear a heavier energy cost burden. Higher oil prices lead to higher prices for goods and services, putting pressure on both consumers and businesses. As the Iran war stretched past two months, the blockade of the Strait of Hormuz, a global energy shipping route, has been prolonged, and oil prices have surged.
According to data from the American Automobile Association (AAA), the national average price for regular gasoline in the United States stood at $4.446 per gallon (3.78 liters) as of Tuesday, up from $4.433 the previous day. Gasoline prices have continued their upward march after topping $4.15 last month, the highest since April 2022 in the early days of Russia's invasion of Ukraine. That is a 40 percent jump from $3.171 a year earlier.
The shock from surging oil prices has been particularly severe in California. The state's average gasoline price stood at $6.101 on Tuesday, the highest in the United States. That is 1.6 times the price in Georgia ($3.851), which has the lowest prices, and 1.4 times the national average.
The U.S. Energy Information Administration (EIA) explains that California's unusually high oil prices result from a combination of factors, including taxes, regulations, special fuel requirements, and isolated refining facilities. California has the highest gasoline excise tax in the United States, and the state's environmental regulations, including its cap-and-trade program and low-carbon fuel standards, are stricter than in other states. California leads the world in carbon emissions trading. The program was originally set to run through 2020 but has been extended to 2045.
In California, soaring housing prices amid the AI boom have been compounded by high oil prices driving up utility costs. The cost of living is rising across the state. According to a February survey by the Public Policy Institute of California (PPIC), seven out of 10 California residents said their incomes are not keeping pace with inflation.
According to PPIC, a sharp decline in refining facilities in California is also cited as a factor fueling the oil price surge. The number of refineries in the state has fallen from 23 in 2000 to 12 as of April 22 this year. Of the annual crude oil supply required for California's refineries, 61 percent is imported from abroad.
Because of this structure, California is highly sensitive to oil prices. PPIC expressed concern that the price surge caused by high oil prices is hitting low-income residents hardest. According to PPIC's analysis of 2022-2023 spending, gasoline accounted for 3.1 percent of spending among the top 20 percent of households by income, compared with 4.3 percent among the bottom 20 percent.
With the prolonged Iran war adding to the strain, the California state government has leveled sharp criticism at the Trump administration. Governor Gavin Newsom, who leads California, is considered a leading counterweight to Trump and a top contender for the Democratic presidential nomination. On the 30th of last month, the state government said on its website: "Sixty-one days in with no plan, Trump's Iran war has driven national gasoline prices to a four-year high, with seven states seeing even larger increases than California." It added, "Every state is bearing the cost of Trump's war, yet the White House still has no plan to reduce that cost."
The California state government struck back at Trump, who has publicly criticized Newsom's energy policies, accusing him of lying. "Thanks to legislation enacted by the governor in a special session to strengthen oversight, improve transparency, and stabilize the fuel market, California gasoline prices have remained stable for nearly two years," the state government said. "But when President Trump declared war to shut down the Strait of Hormuz with no plan in place, crude oil prices surged."
