Oil prices have fallen sharply, dipping below $60 a barrel this week for the first time since February 2021, driven by rising global uncertainty over tariffs and international trade tensions. Yet despite the decline in crude, California drivers are seeing no relief at the pump.

According to data from GasBuddy, the average price of gas in California stands at $4.85 per gallon—highest in the country, even outpacing Hawaii.

The reason for the global drop? Fears of a potential trade war are spooking markets. If international demand for goods weakens—especially from major exporters like China—energy consumption could slow. As factories cut production and global shipping scales back, oil demand drops, and prices follow suit.

But in the U.S., especially in California, gas prices are shaped by far more than just the cost of crude.

Take Oklahoma, for example, where the average price per gallon is nearly two dollars less than in the Golden State. The reason for that disparity isn’t just geography—it’s policy.

California’s fuel costs remain high due to a complex mix of state-level environmental regulations and legal barriers. These include the state’s cap-and-trade program, its exclusive low-carbon fuel standard (LCFS), and a specially required fuel blend that is more expensive to refine. Add to that a shrinking number of in-state refineries and some of the highest fuel taxes in the nation, and the result is a price structure that consistently burdens California drivers.

Industry analysts say that unless state policies shift—or national demand rebounds significantly—consumers in California may continue paying the price, even as global oil markets trend downward.