California drivers should brace for higher fuel costs this summer. Starting July 1, the state’s gas and diesel fuel excise taxes will increase, as part of an annual inflation adjustment.
Each year, California adjusts its fuel tax rates based on inflation data from the Department of Finance. This year's bump means the gasoline excise tax will rise to 61.2 cents per gallon, up from 59.6 cents. Diesel fuel will also increase from 45.4 to 46.6 cents per gallon.
Patrick De Haan, a fuel analyst from GasBuddy, helps explain the increase.
“Instead of having to pass a political bill to raise gas taxes every year, many politicians have simply decided to index for inflation, meaning that as costs go up for every year, politicians who find it difficult to raise taxes now don't have to do that because many of the passed bills adjusting gasoline taxes include mechanisms like automatically adjusting for inflation,” he said.
The California Department of Tax and Fee Administration says the diesel fuel hike, in particular, could lead to ripple effects across industries that rely heavily on transportation, including trucking and agriculture, pushing up the cost of goods and services.
In the last decade, California’s gas tax has more than doubled, with one of the most significant jumps occurring in 2017 when the rate increased by 12 cents per gallon under Senate Bill 1.
As California continues to lead the nation with the highest average gas prices, De Haan encourages drivers to plan ahead and consider apps or rewards programs to help save at the pump.
