California Proposes Price-Gouging Laws as Gas Hits $5.40

Gasoline prices in California reached a state average of $5.40 per gallon ahead of the 2026 Fourth of July holiday, nearly a dollar higher than the previous year. The surge follows a global supply shock caused by a war in Iran, seasonal demand, and a state excise tax that rose to 63.4 cents per gallon on July 1.

Gavin Newsom, the Governor of California, attributed the price spike to President Donald Trump's foreign policy toward Iran. In response to the crisis, State Senators Ben Allen and Josh Becker proposed SB 493, which would expand price-gouging laws to cover wartime emergencies. This legislative push follows reports from the California Energy Commission's Division of Petroleum Market Oversight showing that branded stations, specifically Chevron, are charging significant premiums over unbranded competitors.

Legal challenges have also emerged in Sacramento, where a federal class-action lawsuit accuses fuel-pricing software company Kalibrate and retailers such as Walmart, 7-Eleven, and Marathon of using algorithms to keep prices artificially high. To address long-term supply issues, the state is evaluating the Western Gateway pipeline project and potential changes to California's unique gasoline blend, though the Western States Petroleum Association has opposed these modifications.