It appears that California Governor Gavin Newsom might inadvertently become the biggest benefactor of Donald Trump’s 2024 presidential campaign in key swing states. Newsom’s policies are set to drive up gasoline prices not only in California but also in crucial battleground states like Nevada and Arizona.
California, known for its sky-high gasoline prices, can attribute these inflated figures to a multitude of taxes and stringent environmental regulations. Programs such as cap-and-trade and the low-carbon fuel standard are just the beginning of the regulatory challenges that make operating refineries in the state extremely difficult. Consequently, over 60% of the refineries established in the past century have shut down, leading to a significant drop in supply and a spike in prices.
The economic impact extends beyond California’s borders. Nevada and Arizona, which rely heavily on California for their gasoline supply—90% and 50%, respectively—are also feeling the pressure. Their gas prices mirror those in California due to this dependency. With Governor Newsom intensifying his efforts against the oil industry, the situation is likely to worsen. The California Energy Commission is considering a new tax on refinery gross margins, which could further drive up costs and inevitably impact consumers in neighboring states.
According to The Wall Street Journal’s Allysia Finley:
California has become a billboard advertisement for Mr. Trump, from its rampant vagrancy to unemployment, taxes, energy costs and housing prices that are the highest in the nation. To top it off, the state also has a ballooning budget deficit.
Hundreds of thousands of affluent and working-class Californians have moved to Arizona and Nevada in recent years to escape left-wing policies and their consequences. Now Mr. Newsom is exporting the costs to them and folks in other states. Welcome to Hotel California: You can check out but never truly leave.
As another example, consider CARB’s zero-emissions rail locomotive rule, which BNSF Railway CEO Kathryn Farmerrecently called “a tax on movement of goods through the U.S. supply chain.” Or California’s electric-vehicle mandate, which is forcing automakers to raise costs on gasoline-powered cars to offset losses on EVs they must sell in the Golden State.
Arizona and Nevada are increasingly trending in Mr. Trump’s direction as working-class Hispanics bear the brunt of the Biden administration’s policies. Many migrated from California—and like America’s émigrés from socialist countries, they don’t want to relive the misery from their former lands.
The move comes at a critical time, as gasoline prices in California have surged. In response, Newsom is pushing through legislation that imposes penalties on refiners whose gross margins exceed a certain cap. Ostensibly aimed at preventing price gouging, this measure effectively serves as a revenue-raising tool for the state, which is grappling with a staggering $45 billion budget deficit.
Finley argues that Newsom’s strategy is shortsighted. By conflating profits with gross margins and overlooking the operational losses that refiners face—up to 38 cents per gallon, according to Finley—Newsom is essentially punishing producers for inefficiencies created by his own policies. These increased costs will not remain confined to California; they will spill over into Nevada and Arizona, impacting everyday consumers there as well.
Nevada Governor Joe Lombardo, a Republican, has already raised concerns, warning that these policies could result in limited supplies and even higher costs, further straining the economic situation for his state’s residents. In response, Newsom dismissed Lombardo’s warnings, suggesting that he was merely parroting the rhetoric of oil industry supporters rather than addressing the impending fiscal consequences.
Disclaimer: This article may contain commentary which reflects the author’s opinion.