California diesel price

California is the only state EIA breaks out on its own in the weekly diesel survey, because it is not really the same market as the rest of PADD 5, the West Coast district it belongs to. The state runs its own CARB diesel specification, tighter than the federal standard and made by fewer refineries, and carries the highest state fuel taxes and environmental program costs in the country. Together those give California a large, durable premium over the national average, among the highest this site tracks, one that holds year-round rather than coming and going with the season.

So few refineries make CARB-spec fuel that one outage removes supply with no easy substitute, which is why California can move sharply on a single refinery event. For the rest of the West Coast with California's effect removed, see West Coast except California.

Three separate cost layers stack on a California gallon, and it helps to keep them apart. The first is the fuel itself, made to the CARB specification by a small set of refineries. The second is tax: California carries the highest state excise tax on diesel in the country, plus sales tax on top of it. The third is the state's climate programs, the Low Carbon Fuel Standard and cap-and-trade, whose compliance costs are embedded in the rack price rather than itemized at the pump. What are PADDs covers why EIA reports this one state on its own.

The refining base has been shrinking, which raises the stakes on each remaining plant. Several California refineries have closed or converted to renewable fuel production over the past few years, and the state cannot readily import CARB-spec diesel because almost nobody outside California makes it. When one plant goes down, the substitute has to be manufactured to order somewhere else and shipped in, which takes weeks rather than days. That is the mechanism behind California's characteristic single-event price spikes.

Renewable diesel is the part of this market that has changed fastest. Made from fats and vegetable oils and chemically interchangeable with the petroleum product, it earns credits under the Low Carbon Fuel Standard and has taken a large share of California's diesel pool as a result. It arrives from Gulf Coast and Midwest plants built specifically to serve the California credit market, which means part of the state's supply now answers to feedstock costs and credit prices rather than to crude at all.

Track California's gap on the California vs. the US average page.