Do you feel that sting every time you fill up at the fuel pump? You’re not imagining it. In California, rising fuel prices aren’t just an inconvenience. They’re a real threat to your profit margins.
For everyday drivers, a few extra cents per gallon might be frustrating. But if you’re running a business with vehicles that are constantly on the road, that slight increase can snowball into thousands of dollars in unexpected costs each month. That kind of pressure can shrink your profit on a job, limit how far your team can travel, or force you to make tough decisions about pricing and territory.
And here’s the hard part: in California, we’re not just paying a little more. We consistently pay significantly more than the rest of the country, and the reasons behind this are deeply rooted in state policies, environmental regulations, and infrastructure challenges.
So, what exactly is driving fuel prices so high in 2025? And more importantly, what can your business do to manage the cost? Let’s dig in.
What are fuel prices like in California right now?
Currently, the numbers support what you’re feeling. As of July 2025, the average price for a gallon of regular gas in California is around $4.85, according to GasBuddy and AAA. That’s more than $1.50 higher than the national average of $3.16, as reported by Forbes Advisor. Diesel prices are even higher and more unpredictable depending on location and supply.
Unfortunately, prices aren’t expected to level out anytime soon. A recent study by USC professor Michael Mische warns that, without policy changes, California’s fuel prices could rise above $8 per gallon within the following year. In response to this, Senate Minority Leader Brian W. Jones called for immediate action, stating, “If the Governor doesn’t act now, Californians will be blindsided by sticker shock at the pump and skyrocketing prices on everyday goods.” That may sound far-fetched, but it reflects the direction we’re already heading. Some regions have seen fuel costs rise by nearly 75 cents in the last year alone, and price spikes tied to supply disruptions are becoming more common.
Why is California fuel so expensive?
It’s easy to blame oil companies or global markets for high fuel prices, but California’s unique taxes, regulations, and supply challenges play a big part. There are five key factors that drive up the cost of fuel in the state:
- High taxes and fees
California has the highest gas taxes in the nation. As of March 2025, state and local taxes and fees amount to approximately 90 cents per gallon. This includes a hefty 60-cent state excise tax, a 10-cent sales tax, and a small fee for underground storage tanks. Additionally, federal taxes add an extra 18 cents per gallon (U.S. Energy Information Administration, 2025). - Environmental compliance costs
Programs like the Cap-and-Trade system and the Low Carbon Fuel Standard are designed to cut emissions, but they also increase fuel costs by roughly 54 cents per gallon. These expenses are passed from fuel suppliers to consumers (California Energy Commission, 2025). - Special fuel blends
California requires a cleaner-burning, reformulated gasoline blend that no other state uses. Producing this special blend is more complex and costly. Additionally, only a handful of refineries, mostly located in California, can produce it, which limits supply and drives up prices. - Isolated supply infrastructure
Unlike many other states, California isn’t connected to the national fuel pipeline network. Most gasoline is refined locally, with occasional imports from overseas when supply gets tight. This isolation makes the state more vulnerable to refinery outages and shipping delays (U.S. EIA, 2025). - Regulatory climate and refinery closures
California’s strict regulations have contributed to refinery shutdowns and reduced operating capacity. According to research by USC’s Michael Mische, the state could lose up to 20 percent of its refining capacity by 2026 if this trend continues. The less infrastructure the state has for refining, the more likely it is that prices will continue to rise steadily.
What does this mean for your business?
This is where it hits home. Beyond the headlines and policy debates, California’s high fuel prices create real challenges for business owners just like you.
Take a landscaping company with three trucks and a skid steer on a busy schedule. That extra $1.50 per gallon might seem small, but when each truck burns 15 gallons a day, you’re paying an additional $67.50 daily on fuel alone. Over a typical 20-day work month, that adds up to $1,350 more to keep your crews moving.
Or consider businesses operating in more remote or rural parts of the state. Fuel prices there can be even higher due to limited refinery access and transportation costs, meaning operators may pay significantly more than their counterparts in urban areas. For example, a fleet based outside major metropolitan centers may face price fluctuations that directly impact how far they can expand their service areas or take on new projects.
But even if your business doesn’t rely on a fleet of vehicles or equipment, you may still feel the effects of higher fuel costs. For example, fueling station owners and quick lube shops see decreased customer visits and tougher competition when prices rise. Customers may shop around more, hunting for the cheapest pump, which can shrink your regular clientele and tighten your margins.
No matter your industry, whether you operate heavy equipment, manage a fleet, or run a service station, one thing is clear: you can’t control California’s fuel market. But you can control how much you spend on fuel and how you manage those costs.
We can help you control your fuel budget
At Greg’s Petro, we understand what fuel inflation means for your business because we work with companies like yours every day. That’s why we offer a fleet fueling program through the Commercial Fueling Network (CFN). Here’s what our program offers:
- Easy tracking: Get detailed, real-time reports that show fuel usage by vehicle, driver, and location. No more guessing where your fuel dollars are going.
- Purchase limits and controls: You can restrict purchases by time of day, fuel type, dollar amount, or day of the week. This helps you prevent after-hours fill-ups, unauthorized spending, and misuse.
- Access to the CFN Fuel Network: As a member, you’ll have access to the CFN network. This will enable your team to access their nationwide network of locations, offering competitive wholesale rates. That means your cost per gallon is more predictable, even when retail prices fluctuate.
- Easier accounting: No more stacks of receipts. All purchases are logged digitally, making tax time and bookkeeping much easier.
Whether you’re running a fleet of utility vehicles, managing fuel for a job site, or operating multiple business locations, our card program gives you the control you need in a state where fuel is anything but predictable.
Take control of your fuel costs
There’s no sign that California’s fuel prices will drop anytime soon. Years of policy decisions, infrastructure challenges, and environmental regulations have made fuel one of the most significant expenses for many businesses. While you can’t change the market, you can take control of how much you spend and protect your bottom line.
That’s where our fuel card program comes in. Designed with businesses in mind, it helps you track fuel usage, set spending limits, and access competitive pricing so you can turn unpredictable pump prices into manageable, predictable costs.
Let Greg’s Petro help you take the guesswork and stress out of fueling your business. Because your time and energy are better spent growing your company, not worrying about what the next fill-up will cost.