As of April 2026, the United States is engaged in military conflict with Iran, directly impacting California economically and causing it to rank as one of the most expensive places to live in the United States.
Today, residents face increasing financial pressure with housing, energy, insurance and more. Although, one of the most noticeable price changes in California has been the dramatic price surge of gasoline.
Gasoline in California has always been considered more expensive than the rest of the United States. However, according to AP News, the war with Iran has spiked global oil markets. The Iran war halted oil tanker movement in the Strait of Hormuz, causing a record high surge in prices for gas.
Beyond oil, the global supply chain has been disrupted, affecting pharmaceuticals from India, semiconductors from Asia and more. Planes carrying cargo outside of the Middle East are grounded and it’s more likely that there will be shortages and price increases on a wide range of goods the longer the war continues.
The war with Iran is only one of the reasons why global prices are soaring. According to CalMatters, California has a structural problem. The state has fewer refineries to convert oil into different types of fuel, a captive market where buyers have limited high cost options and no easy outside supply option. Whenever prices start to soar nationally, they rise even higher in California.
To fight these price spikes, California built a first-in-the-nation system to protect drivers. The California Gas Price Gouging and Transparency Law, authored by former California state Sen. Nancy Skinner and signed by Gov. Gavin Newsom, would root out price gouging by oil companies and authorize the California Energy Commission to create a penalty to hold the industry accountable.
“With this legislation, we’re ending the oil industry’s days of operating in the shadows,” Newsom said. “California took on Big Oil and won. We’re not only protecting families, we’re also loosening the vice grip Big Oil has had on our politics for the last 100 years.”
“This landmark law will allow us to hold oil companies accountable if they pad their profits at the expense of hard-working families,” Skinner said.
Unfortunately, this new law that allowed regulators to have the power to cap refinery profits and penalize oil companies for price gouging has never been used. Skinner, who wrote the law as senator, was absent when the California Energy Commission voted to delay it for five years.
It has always been expensive to be a homeowner in California, as housing costs have always been higher than the national average and have continued to grow significantly, according to the Legislative Analyst’s Office. Mid-tier homes in California cost about $755,000, more than twice as expensive than the typical mid-tier U.S home.
From 2020 to 2022, California home prices grew very rapidly. Mid-tier homes increased 14% per year and bottom-tier homes by 15%. Since July 2022 home prices have been stable with no significant net increase for mid-tier and bottom-tier homes. Unfortunately, while home prices have stabilized, housing has become less affordable in recent years for Californians.
According to CalMatters, California does not have enough housing to keep up with the demand for the short supply of homes. The difference between the number of homes needed and the number of homes built has been growing for decades, therefore prices continuously go up. Home price and the cost of gas continues to grow, which inevitably makes California’s troubling economy affect residents.
The homeownership rate is very low and it’s becoming less affordable for someone looking to rent. Meanwhile the California Gas Price Gouging and Transparency Law will remain on hold till 2029. As a result California may continue to suffer more gasoline price shocks and struggle for housing.
As a solution, sources such as The Guardian report that online searches for hybrid and electric vehicles increased as war-linked fuel prices hit records because electric vehicles are now being seen as the answer for buyers who are needing to save money on fuel. Charging with electricity is typically cheaper than stopping for gas, meaning an electric vehicle will save the driver money over time.
