Against the backdrop of soaring fuel prices, San Jose Mayor and Democratic candidate for California governor Matt Mahan has put forward a radical proposal. During the gubernatorial debate in Monterey on March 12, 2026, he called on lawmakers in Sacramento to immediately suspend the state gas tax.
Record Prices: On Track for $7 a Gallon
The situation at gas stations across the state has reached a critical point. According to AAA data as of March 16, 2026, the average price of a gallon of regular gasoline in California is $5.526, significantly higher than the national average of $3.718.
In some parts of the Bay Area, such as Menlo Park, prices have already come close to the $7 mark. The price increase over the past month has been more than 90 cents. Analysts from USC and UC Berkeley warn that if tensions in the Middle East and risks to oil supplies persist, California drivers could see prices hit $8 or even $10 per gallon.
“The California Surcharge”: What Goes Into the Price
California remains the state with the highest tax burden on gasoline in the U.S. The state adds a tax of $1 to $1.24 per gallon to the market price of oil:
• State Excise Tax: About 61 cents (with an expected increase to 62–63 cents in July 2026).
• Environmental Fees: Cap-and-trade programs and the Low Carbon Fuel Standard (LCFS), as well as requirements for producing cleaner summer fuel.
Matt Mahan emphasizes that the state’s contribution is one of the key factors driving high fuel prices. “This is not a natural disaster, but a man-made disaster caused by the war in the Middle East, for which Californians should not have to pay out of their own pockets,” the mayor stated in his address.
Political Divide in Sacramento
Matt Mahan’s proposal has sparked a mixed reaction in political circles. The office of incumbent Governor Gavin Newsom insists that taxes are fixed costs and are not the primary cause of the sharp price spike.
At the same time, Republicans in the California State Legislature support similar measures, including Assembly Bill 1745, which proposes a one-year suspension of the excise tax. Previously, the Democratic majority rejected the idea of a “tax holiday,” arguing that gasoline taxes are the primary source of funding for road and infrastructure repairs.
Professor Severin Borenstein of UC Berkeley confirms that about a dollar of the price per gallon is attributable to taxes and environmental regulations. At the same time, experts point to a serious challenge: how the state plans to maintain the condition of the road network without these budget revenues. Matt Mahan acknowledges the complexity of the issue but argues that the “cost of inaction” for ordinary families is much higher today.
“Affordability” Campaign Strategy
For Matt Mahan, who entered the gubernatorial race in late January 2026, this initiative has become a central part of his platform. Positioning himself as a moderate Democrat, he has been actively critical of Sacramento’s approach to housing affordability, homelessness, and public safety.
“Working families are forced to choose between paying rent, putting food on the table, or buying gas to get to work. California’s leaders must choose to help people,” Matt Mahan concluded.
For many voters in Santa Clara County and throughout the Bay Area, this proposal could be a deciding factor, as it promises immediate budget relief amid record-high inflation.
FACTUM.