Author: Kyle

California’s Gas Prices Are Getting More and More Expensive

California's Gas Prices Are Getting More and More Expensive

California repeatedly warned about spiking gas prices, fragile supply. But fixes never came. And consumers took what they were given, putting the brakes on demand and driving up prices.

Gas prices are so high that California has ordered drivers to turn off their cars’ air conditioners. Consumers won’t stop driving. And the Golden State’s gas supply is near record-low levels.

This time, it’s not just oil prices that are spiking. It’s the cost to replace parts for cars that are 25 to 50 years old.

The average price of a new vehicle in the U.S. has been steadily increasing for the last three decades. But over the last two decades, the price of new cars in California has been on track to increase at an average annual rate of 10 percent, and a little more every year, according to data from the California Department of Motor Vehicles.

And the cost of auto parts is expected to rise at a rate twice as fast, at an annual rate of 15 percent per year, as cars are replaced.

What to do about it? In some cases consumers could take their business elsewhere. In other cases, it could be the result of a broken market.

In California, where car-buying power is a fraction of what it is in some other states, consumers are stuck with this dilemma. Car sales growth in the Golden State has been relatively small compared with sales in Florida or Arizona. That makes it tough for consumers to choose a car. The result is that gas and auto parts prices have remained stable, said Ed Yarnell, assistant director of the California Automotive Leadership Council.

“We’re stuck with the same problem,” Yarnell said. “California is the quintessential automotive market. It’s the one where cars are made in America, where gas is affordable, it’s a very tight supply, and it’s the one that’s getting more and more expensive.”

How Prices Stabilized

Gasoline prices in the U.S. have remained stable since the mid-1970s.

The reason is a law called the Motor Carrier Act of 1980, which has required the Department of Motors Vehicles to maintain fuel prices, even though they are set by the president’s National Production Agreement with the International Trade Commission. In turn, the trade group has

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