The Board of Equalization announced Monday the state excise tax on gasoline will drop by 2.2 cents per gallon beginning July 1, 2016.

This lowers the current excise tax rate from 30 cents to 27.8 cents per gallon.

“Californians have another reason to celebrate during Independence Day weekend,” said Runner. “This gas tax rate cut comes right on time for those hitting the road during the holiday.”

The Board approved the 2.2 cent tax rate reduction at its February 2016 meeting. The 27.8 cent per gallon rate will remain in effect until June 30, 2017.

Even with the lower rate, Californians will continue to pay some of the highest gas taxes in the nation. According to the latest information from GasBuddy.com, California also has the highest average gas price in the nation, beating Hawaii, Washington and Alaska for the top spot.

Additionally, the Legislative Analyst’s Office estimates the state’s cap-and-trade auction has raised the price of gasoline by 11 cents per gallon and 13 cents per gallon of diesel.

The Board has been tasked with adjusting the excise tax rate on gasoline since 2010, when two pieces of legislation (AB x8 6 and SB 70, collectively known as the fuel tax swap) took effect. The Board sets the rate annually so that over a three-year period, no more or less revenue is collected under the fuel tax swap than would have been collected under the prior gasoline tax structure. The excise tax on gasoline goes to the State Transportation Fund for the construction and maintenance of public roads and mass transit.

Although Californians will pay less in state excise tax on gasoline starting July 1st, this may not necessarily translate to lower overall prices at the pump. According to the United States Energy Information Administration, factors such as crude oil prices, refining costs, and distribution and marketing costs also affect gasoline prices. Crude oil prices—which are affected by worldwide economic growth, regional economies, supply and demand—are the largest component of United States gasoline prices, as explained in the latest issue of BOE’s Economic Perspective.

The latest issue also highlights the strong relationship between U.S. gas prices and California gas prices, and California’s gas price is one of the biggest components in setting the excise tax rate annually. U.S. gas prices have declined 37 percent from June 2014 to May 2016, and California’s gasoline excise tax rate has decreased every year since fiscal year 2013-14. Gasoline purchases in California also have increased, with the latest data showing that gasoline consumption for the fourth quarter of 2015 was the highest since 2007.