Jonah is right that special environmental additives and higher state taxes account for some of the reason California’s gas prices are the highest in the nation, but by far the biggest reason is simply a shortage of refining capacity for California-specific gas. It has been unthinkable to build a new refinery in CA for decades, and modifying one to expand capacity is nearly impossible. So with a growing state, CA has to import more gasoline from other states, driving up the price of gas throughout the region.
What always amuses me is my liberal CA friends who say our gas is too cheap and should be taxed as it is in Europe. So at moments like these, I always taunt them that they must be happy now that gas is more expensive! This whole situation is really quite revealing: Why are liberals happy if gas costs $2 a gallon because of an energy tax, but unhappy if gas costs $2 a gallon because of the marketplace? Obviously, it is only fun if the government profits by it. Meanwhile, I make a point of smiling at the pump when I fill up my California SUV (with super, no less!) on my regular trips out. Californians are only getting what they deserve.