Record second-quarter profits at several major oil companies are giving California legislators fresh ammunition in their push against the industry, even as motorists in the state continue paying some of the highest gasoline prices in the nation.
The second-quarter earnings have sharpened a debate over what is driving fuel costs in California: global disruptions tied to war, state policy, or corporate pricing power in the state's unusually isolated gasoline market.
What's happening?
While California gas prices stayed above $5.60 a gallon, several oil companies and refiners posted huge April-to-June earnings.
Chevron reported $12.1 billion in profit, Marathon Petroleum reported $5.1 billion, and Valero brought in $3.7 billion, with PBF Energy also posting a major windfall, according to the Los Angeles Times. The war in Iran tightened fuel supplies and pushed oil and gas prices higher.
A bill introduced by state Sen. Josh Becker and state Sen. Benjamin Allen would classify war as an emergency under California's price-gouging law. That statute limits price increases to 10% above pre-emergency levels, and the proposal is scheduled to go before the Assembly Appropriations Committee on August 13.
State Sen. Henry Stern has put forward a separate proposal that would allow sales of regular gasoline instead of California's special blend and impose a fee that could help fund programs such as electric vehicle rebates.
The Western States Petroleum Association says that approach would penalize companies that have already invested in producing fuel for California.
Why does it matter?
The gap between California fuel prices and national prices has been substantial in 2026. Consumer Watchdog said California gas prices were $1.50 above the national average in 13 of the first 25 weeks of 2026, while California Energy Commission figures showed branded stations charging an average of 31 cents a gallon more than unbranded stations in the state.
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Coal and natural gas power plants contribute to air and water pollution linked to asthma, heart disease, cancer, and premature death, while keeping energy costs high for households that rely on those fuels instead of more abundant energy sources such as sunlight and wind.
The oil and gas industry has spent more than $17 million lobbying the state Legislature in 2026. Critics say that spending can slow the adoption of cleaner, cheaper energy options that would better protect families and reduce costs.
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What's being done?
California already has a 2022 law signed by Gov. Gavin Newsom that gives the California Energy Commission power to cap refinery profits. But the agency has said it has deprioritized using that authority while it studies how such a cap might affect consumers and fuel supply.
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Consumer Watchdog President Jamie Court said a $1-per-gallon cap could have saved drivers $611 million.
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Chevron said the quarter's results reflected its global operations and earlier investments, while the Western States Petroleum Association argued that stricter profit limits could discourage imports and increase shortage risks in California, which has grown more dependent on outside supply after refinery closures.
"These profits are absolutely obscene," Becker said.
But Western States Petroleum Assn. spokesperson Jim Stanley countered, "Branded products selling at a premium above a generic alternative is completely normal in any market."
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