California’s petroleum regulator has identified structural issues within the state’s fuel market that contribute to elevated gas prices, even as global events drive statewide spikes. Tai Milder, head of the state’s petroleum watchdog, testified before senators on June 3 that the current price surge has revealed a distinct problem with how branded gasoline is priced. Data from his division showed that the stations with the highest prices were all major brands, despite all fuel in California meeting identical state standards.
The analysis found that Chevron stations charged the highest premiums compared to nearby competitors. Milder’s office traced this gap to the way fuel is purchased. California relies heavily on contracts where refiners sell directly to branded retailers at set prices. This arrangement locks branded operators into paying more than unbranded stations for the same product. Jeremy Martin of the Union of Concerned Scientists noted that branded stations cannot shop around for better rates because they are tied to their specific supplier.
Chevron spokesperson Ross Allen disputed the implication of unfair pricing, stating that most branded stations are independently owned and set prices based on local competition. He attributed high costs to California’s energy policies rather than corporate pricing strategies. The Western States Petroleum Association, the state’s industry lobby, argued that branded goods naturally sell at a premium over generic alternatives. The group also noted that California has fewer gas stations per capita than the rest of the country.
Governor Gavin Newsom has personally criticized Chevron, accusing the company of exploiting its brand name to overcharge drivers during wartime oil profit surges. Newsom previously pushed for new powers to prevent future price shocks through special legislative sessions in 2022 and 2024. These laws created the current watchdog and revealed an unexplained premium of about 41 cents per gallon between 2015 and 2024, costing drivers an estimated $59 billion.
However, more aggressive measures authorized by those laws remain inactive. These include penalties on excessive refinery margins and requirements for refiners to maintain larger fuel reserves. The tools have not taken effect partly because two refineries have shut down in the past year. Average gas prices climbed above $6 a gallon this spring as the Iran-Israel war affected oil markets. The administration has been working with refineries to ensure supply during this period.
