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%.

In the North Bay, the SMART commuter rail line will begin work next week to extend service to the city of Healdsburg, with plenty of challenges, both in construction and in finding long-term funding.

As the largest city north of Santa Rosa, Healdsburg is generating considerable excitement among those who await SMART’s arrival. But first there’s a lot of work to do, starting next week.

“It starts with a topographical survey,” said SMART Chief Engineer Bill Gamlen. “Monday, we’ll be moving into geotechnical boring, where we’ll have a drill rig out on the site, and we are taking cores of soil samples. There’ll be a lot of things going in parallel. We’re going to be taking things apart, tearing out old track, taking out old bridges, tearing up grade crossings.  The bridge across the Russian River will be one of the first activities there.”

That bridge was built in the 1870s and will need a complete replacement to carry the weight of the modern SMART trains. The prep work will take about a year, with actual construction beginning next spring. The $270 million in funding for the extension is already in place and SMART expects to be pulling into the old Healdsburg station sometime in late 2028.

“We think it’s a big milestone,” said Gamlen. “You know, Healdsburg is a delightful place to go visit on the weekends, and even vacation there.  So, we see a lot of ridership heading up to Healdsburg, a destination, probably, more than an origination point.”

But that’s a problem, according to Mike Arnold, an economist and outspoken critic of SMART, living in Novato. Arnold said he thinks SMART will never be financially feasible because it doesn’t take people to any large urban job centers.

“The primary problem is the economics,” he said. “Passenger rail in suburbia just doesn’t get the ridership. And the reason is because there just isn’t a place for people to get to easily. There is no major employment center in either Marin or Sonoma Counties.  And so, therefore, when you take people to stations, how are they going to get where they want to go? The answer is, very few of them do, and that’s why they get very few riders.”

Currently, kids and seniors pay no fare, and Arnold said that means more than 40 percent of riders are riding for free. And he points to Hwy 101, where SMART was supposed to relieve traffic during morning commute times.  

Changes in work habits, brought on by the pandemic, have decreased the number of commuters, but Arnold said it has simply compressed the traffic jams into a smaller time period, with little impact from SMART.

“You’ve narrowed the peak,” he said. “But when you talk about peak-hour congestion at 7:30 in the morning, it looks like it hasn’t changed at all.  And the answer is, based on the count on the cars, it really hasn’t changed at all.”

The debate matters because in June voters will be asked to decide whether or not to extend, for another 30 years, the quarter-cent sales tax to continue funding SMART.  The current tax will sunset in 2029, shortly after the Healdsburg extension is scheduled to be finished.