Sacramento, CA – Recently, the UC Berkeley Energy Institute at Haas released a study highlighting the impact gas station competition has on the price of fuel. Using a dataset where 1,000 new gas stations entered the market, the findings showed that the more gas stations there were, the lower the price of gas, with a significant price decrease for regular and premium gasoline after the entry of a competitor.

In California, consumers have continuously grappled with the highest gas prices in the nation. With the findings from the Energy Institute’s recent study, it comes as no surprise that the continued surge in gas prices is heavily attributed to the diminishing pool of gas stations in the state. Lack of competition has not been a choice by gas station operators, but rather a result of state and local policy that has created significant barriers for new stations to enter the market.

The findings from the HAAS study come to the same conclusion as a study CFCA independently commissioned this year on the “Impacts of Statewide Ban on New Construction and Upgrades to fueling Establishments in California.” The study provided troubling findings that government enacted bans on gas station construction have devastating results for consumers. Bans reduce fueling options, leading to less competition and rising prices for gasoline. And these price increases heavily impact low- and moderate-income households. Unsurprisingly, California has fewer gas stations per capita compared to other states in the nation, shaping the California fuels landscape to be one of high prices without any relief in sight.

The lack of station competition continues to directly hurt one of the most diverse industries in California where 40 percent of establishments are minority owned, and nearly 60 percent of owners are first generation, foreign-born immigrants – the highest of any industry in the U.S. Moreover, 95 percent of fueling establishments are operated by small business owners of independent or branded fueling establishments. About 60 percent of gasoline establishments are operated by owners that own just one station.

The burden of taxes and fees imposed by the California government on every gallon of gas further exacerbates this strain on Californians’ wallets. This past July, the California Energy Commission (CEC) disclosed that refiners in the State were making a mere 14 cents profit per gallon of gasoline, while the California government was raking in a staggering $1.08 per gallon. This drastic disparity sheds light on the outsized role government-imposed taxes and fees play in driving up the cost of fuel.

“The findings from this study prove once again that our industry is both diverse and essential to California’s economy,” said Alessandra Magnasco, Governmental Affairs & Regulatory Director of the California Fuels and Convenience Alliance. “As both studies demonstrate, vibrant competition between gas stations drives down cost and benefits consumers. Regrettably, several local jurisdictions have done the opposite by implementing bans on new stations, increasing costs for their residents. Hopefully the State and other policymakers will see the results of this study and begin a thoughtful discussion on ways to make the marketplace more competitive.”

CFCA calls on state legislators and local city councils to account for these market dynamics when evaluating the importance of gas stations and the role of fuel supply in the State. It is critical that decisionmakers have a comprehensive understanding of the market and the rippling effects that major policy decisions have on Californians’ pocketbooks.