California Delays Profit Cap on Oil Companies Amid Gas Price Surge

California, August 31, 2025

News Summary

California energy regulators have delayed the implementation of a profit cap on oil companies until 2030, a move expected to affect gas prices during a time of rising fuel costs. The postponement comes as two major refineries are set to close, reducing the state’s refining capacity by 18%. Gas prices in California average $4.59 per gallon, significantly higher than the national average, raising concerns among critics that this delay could lead to even higher prices in the future. Lawmakers are exploring various strategies to address the ongoing issues related to fuel pricing.

California energy regulators have officially delayed plans to implement a profit cap on oil companies, a decision expected to impact gas prices amid rising fuel costs. This postponement, which now pushes the potential profit penalty until 2030, is seen as favorable for the fossil fuel industry at a time when California experiences the highest gasoline prices in the nation.

The California Energy Commission’s decision comes in the wake of two major oil refineries set to close in the near future, cutting approximately 18% of the state’s refining capacity. As tensions mount surrounding these closures combined with a state struggling to keep fuel prices manageable, the decision underscores the complexities underlying California’s energy sector.

Gas prices in California have notably risen, with the state averaging $4.59 per gallon for regular unleaded, significantly higher than the national average of $3.20. This marks an increase of nearly 8 cents from the previous week and 12 cents from last month. In some regions of Southern California, gas prices have surged more than 10 cents just before the approaching Labor Day weekend, attributed to refinery maintenance impacting wholesale fuel prices.

Governor Gavin Newsom previously asserted that the state had “finally beat big oil” two years ago, yet the current regulatory delay on profit margins for oil companies raises concerns among critics. Prominent voices in the energy discussion have labeled the commission’s vote as a “giveaway” to the oil industry, warning of a possible spike in gasoline prices in the future due to the regulatory landscape.

Additionally, the Western States Petroleum Association supports the extended timeline for the profit penalty into 2040, arguing that the root causes of high gasoline prices are tied to California’s regulatory costs and supply challenges rather than refinery profit margins.

Despite the recent hikes in gas prices, California’s average gasoline cost remains approximately 4 cents lower than at the same time last year. The Los Angeles-Long Beach area reflects this, averaging $4.61 per gallon, which is a 14-cent rise from the previous month. Industry analysts anticipate fluctuations in gas prices moving forward, possibly decreasing during the fall and winter months.

Lawmakers are actively discussing various proposals to alleviate high gas prices, including potential adjustments to California’s unique fuel blend. There is growing agreement among both lawmakers and industry experts that recent measures allowing the Energy Commission to determine refiners’ profit margins should be reconsidered in order to foster a more stable market.

The California Energy Commission has thus far postponed voting on crucial regulations designed to establish caps on refiners’ profit margins alongside additional strategies to increase the state’s fuel reserves as refineries close down. The outlook for gas prices remains uncertain, particularly with the upcoming Labor Day weekend boosting travel demand even as costs rise. Nationwide, gas prices for this holiday are anticipated to average around $3.15, marking the lowest point since 2020.

Key Points Summary

• California’s average gas price is notably higher than the national average, currently at $4.59 per gallon.
• Two oil refineries that account for 18% of California’s refining capacity will close soon.
• The state continues to experience debates on regulating gas prices and profit margins for oil companies.

Frequently Asked Questions

Deeper Dive: News & Info About This Topic

• Los Angeles Times: SoCal Gas Prices Surge Ahead of Labor Day Weekend
• Wikipedia: Gasoline
• Politico: Your Guide to Newsom’s Gas Price Gambits
• Google Search: California Gas Prices
• AOL: California Gas Prices Jump
• Encyclopedia Britannica: California Energy
• KTLA: Gas Prices Up as Holiday Rush Kicks Off
• Google News: California Energy Commission
• AAA: Gas Prices Go Down, But How Low Will They Go?

Author: STAFF HERE SAN DIEGO WRITER

SAN DIEGO STAFF WRITER The SAN DIEGO STAFF WRITER represents the experienced team at HERESanDiego.com, your go-to source for actionable local news and information in San Diego, San Diego County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Comic-Con International, San Diego County Fair, and San Diego Pride Festival. Our coverage extends to key organizations like the San Diego Regional Chamber of Commerce and United Way of San Diego County, plus leading businesses in biotechnology, healthcare, and technology that power the local economy such as Qualcomm, Illumina, and Scripps Health. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.