California Democrats are proposing gas tax cuts amid rising prices

from Jeanne Kuang and Alejandro LazoCalMatters

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One candidate wants to stop a number of state environmental policies that raise the price of gas. Another wants to end the state gas tax at 61 cents a gallon.

Amid a surge in gas prices fueled by President Donald Trump’s war on Iran, at least two Democratic candidates for governor of California are seizing the moment to push for policies they say will give drivers a break.

The latest proposals from former Los Angeles Mayor Antonio Villaraigosa and San Jose Mayor Matt Mahan reflect how Democrats are trying to use rising gas prices, a strong issue in an election year, to distinguish themselves as a cost-of-living priority.

Their Republican opponents have been making the same claim for months.

Villaraigosa is calling for a moratorium on various state regulations to reduce greenhouse gases, which he called “failed policies.” They include limits on carbon emissions from refineries, standards to reduce carbon in fuels and other rules that he blames for forcing refineries to close. Such policies together they add about 50 cents to the cost of each gallon of gas, state estimates show.

Villaraigosa has received several campaign donations from the fossil fuel industry, including from Chevron, Marathon, the state’s largest oil and gas producer California Resources Corporation and executives of two Kern County drilling companies.

Mahan supports a temporary suspension of the state gas tax, but said in an interview that he would not rule out limiting some of the state’s regulations on refineries.

Both candidates are moderates below, and their proposals are similar to the ideas being pushed by the top two Republican candidates.

Republican Steve Hilton has promised to bring the price of gas down to $3 a gallon in the state by cutting the gas tax in half and eliminating policies that cut emissions. Chad Bianco would completely eliminate the gas tax. Both Republicans would expand oil drilling in the state and keep refineries open, a goal Villaraigosa and Mahan also share.

Top Democratic candidates Katie Porter, Tom Steyer and Eric Swawell have not weighed in on what they would do to ease gas prices. Steyer and Swawell on Tuesday night dismissed Villaraigosa’s and Mahan’s proposals as frivolous. Steyer spokesman Danny Wang said he would prefer to focus on “making sure oil companies don’t reap excess profits,” while Swalwell spokesman Micah Beasley said he would prioritize keeping refinery fuel stocks stable as the state transitions to clean energy. Porter’s campaign did not respond to inquiries.

Democratic strategist Andrew Acosta said Villaraigosa and Mahan’s ideas could help moderate Democrats boost the credibility of their campaigns, but he questioned whether they would make a difference in a crowded race where voters still don’t pay much attention.

The last poll shows Mahan and Villaraigosa tied with just 3 percent of likely voter support, but a quarter of those polled remain undecided about a candidate. Both are lax on ad spending from self-funded billionaire candidate Steyer, and Acosta said the gas proposals won’t gain traction if the candidates don’t spend heavily to advertise them on television.

“It could be a gimmick or it could be good politics. Will anybody hear it? I don’t know,” Acosta said of the gas proposals. “It’s a little bit harder to get someone’s attention just on the race itself, let alone this issue.”

Why Are California Gasoline Prices So High?

While candidates blame taxes and climate regulations for high gas prices, experts point to a more complex, less politically convenient reality: The recent surge is largely due to a global oil shock linked to the Iran war, not government policy.

Still, the war adds to the deeper vulnerability of California, where gasoline prices have soared above $5.50 a gallon on Tuesday compared to nearly $3.80 nationally: As refinery capacity is declining and dependence on imports increases, global disruptions could cause higher prices in California than anywhere else.

“The current increase is almost entirely driven by global oil markets,” said Paasha Mahdavi, a political science professor at UC Santa Barbara and an expert on energy policy. “However, the problem … is that our starting point is much higher than the national one.”

condition analyses show that higher gasoline prices in California come not only from taxes and climate programs, but also from a large remaining “mystery surcharge,” an unexplained markup that oil companies add to gasoline prices.

This unexplained premium averaged about 41 cents per gallon between 2015 and 2024, costing drivers approximately $59 billionaccording to the US oil market watchdog.

“Gasoline prices are much higher in California for reasons related to the refined gasoline market,” said Michael Vara, a Stanford legal scholar who focuses on climate. “This is something that is under the control of the industry.”

The oil industry blames California’s policy.

Prices “are higher in California because of taxes and compliance costs, but also because state policies have driven out refineries and crude oil production,” said Jim Stanley, a spokesman for the Western States Petroleum Association, in a written statement.

Stanley declined to comment on Villaraigosa’s proposal for a regulatory moratorium.

Villaraigosa’s call for an “overhaul” of the state air resources board and an “immediate moratorium on costly regulations unduly burdening California refineries” is a familiar refrain.

Onboard climate programs — including the low-carbon fuel standard and the state cap-and-trade program, recently renamed cap-and-trade — have faced repeated political and industry pushback, especially as regulators consider updates that could affect refinery costs.

These climate policies raise fuel costs, but also generate billions for clean energy and transportation programs.

The California Air Board has faced growing criticism over both programs — the fuel standard drew opposition from Republicans, the oil industry and even environmental justice advocates when it was revised in 2024and this year oil companies, some members of the Democratic Party and Villaraigosa warned that tightening cap-and-trade rules could accelerate refinery shutdowns.

A hot political issue

An even easier target in campaign promises is the gas tax, which lawmakers voted to raise in 2017.

It has since risen 20 cents a gallon to 61 cents and generated nearly 8 billion dollars a year — the majority of government funding for highway and road repairs.

It’s also a sensitive issue for Democrats, especially in swing districts.

Porter, who is running as a Democrat to carry the GOP-held Orange County congressional seat in 2018, supported a failed GOP-led measure to repeal the gas tax increase and ran ads declaring that “I’m against higher gas taxes.”

The move cost her labor approval — unions typically support the tax because the revenue pays for projects their members work on — but helped her overcome claims she supported the increase while running as an economic progressive.

“Removing the gas tax is an easy job.”

Ryan Cummings, team leader at the Stanford Institute for Economic Policy Research

Two Democratic lawmakers have lost their seats to Republicans in recent years after criticism of the gas tax.

Now Mahan, a Democrat, is proposing a gas tax holiday. He proposed that this would continue “for the duration of the war,” with the primary goal of keeping average prices below $5 a gallon.

“I would leave it to the experts in Sacramento to determine that limit, but I think something around $5 is reasonable,” he said.

Asked how he would pay for road and highway repairs in the meantime, Mahan said he would find other funding elsewhere in the state budget.

Ryan Cummings, chief of staff at the Stanford Institute for Economic Policy Research, said he’s skeptical that the shutdown will save drivers because gas companies may pocket some of the savings.

But he also cautioned that the governor is not eliminating the tax without providing alternative funding for road maintenance; a tax refund in the future would be seen as raising the price of gas by 60 cents a gallon at a time.

If history is any guide, voters would likely oppose it: In 2003, facing recall, then-Gov. Gray Davis tried to restore the vehicle license fee that the state had lowered for years. Opponent Arnold Schwarzenegger jumped to attack him for tripling the “car tax,” a move that observers agree helped him oust Davis.

“Abolishing the gas tax is easy to do,” Cummings said. “Putting it back is extremely difficult – and essential.”

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.