SOUTH SAN FRANCISCO, Calif. – You’re not dreaming. Gas prices really are that high.

National average $4 a gallon, California $6

In fact, at the Shell station at 248 S. Airport Boulevard in South San Francisco, regular gas was going for $6.89 a gallon on Tuesday, about four weeks after the United States and Israel started a war in Iran. 

Most people didn’t even stop to fill up; instead, drivers seemed to just pass the station by. 

Juan Buenrostro did stop, though, and said it costs him about $300 to fill up his truck. He lives in Santa Cruz and had to drive to the Marina in San Francisco.

“It’s been crazy, man,” he said. “I have to work extra hours to make extra income. We’ve been struggling.” 

That price is roughly double what the national average is. AAA said the average price of gas was $3.97 a gallon as of Tuesday, and the average price in California was $5.82. 

Prices are so high that the state’s petroleum watchdog, the Division of Petroleum Market Oversight, has launched an investigation into possible price gouging, specifically at gas stations charging $7 or $8 a gallon. 

A Chevron in downtown Los Angeles was selling gas for $8.71 a gallon this week. 

Gas was selling for $8.71 a gallon at a downtown Los Angeles Chevron station. Photo: Fox11. March 23, 2026

Kate Gordon, CEO of California Forward and a former senior adviser to the U.S. Secretary of Energy, said $10 gas is not out of the question under certain conditions.

“Can you imagine a world where we’re paying $10 a gallon? … Yes, I can,” Gordon said.

Gas prices on March 24, 2026. Source: AAA

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Last year, prices lower

A year ago, the average price in the United States was $3.13 a gallon, and the average price in California was $4.64 a gallon, according to AAA. 

The highest average price for gas in California ever recorded was $6.44 on June 14, 2022, when Russia invaded Ukraine. 

War in Iran 

Regular gas was selling for $6.89 a gallon at a Shell gas station in S. San Francisco. March 24, 2026

Oil and gas prices have been soaring since the war in Iran began a month ago, and when Iran began retaliating against the United States by choking off the Strait of Hormuz – a critical oil passageway. 

Gas prices are likely to remain elevated for some time, even if the war ends soon, because shipping and production have been disrupted and will take time to recover. Economists now expect slower growth this spring and for the year as a whole, as dollars that are spent on gas are less likely to be used for restaurant meals, new clothes, or entertainment.

Lower income households bearing the brunt

Lower and middle-income households are likely to be hit particularly hard, because they receive lower refunds, while spending a greater proportion of their earnings on gas.

Neale Mahoney, director of the Stanford Institute for Economic Policy Research, calculates that gas prices nationwide could peak in May at $4.36 a gallon, based on oil price forecasts by Goldman Sachs, followed by slow declines for the rest of the year. The notion that gas prices decline much more slowly than they rise is so ingrained among economists that they refer to it as the “rocket and feathers” phenomenon.

In that scenario, the average household would pay $740 more in gas this year, nearly equal to the $748 increase in refunds that the Tax Foundation has estimated the average household will receive.

And it’s only worse in California. 

The impact will likely worsen the “K-shaped” narrative around the U.S. economy, analysts said, in which higher income households have fared better than lower-income households. The bottom 10% of earners spend nearly 4% of their incomes on gasoline, Pantheon Macroeconomics estimates, while the top 10% spend just 1.5%.