Fuel prices in California are escalating at a pace far exceeding the rest of the United States, driven by a combination of geopolitical tensions and the state’s distinct energy policies. The ongoing conflict involving Iran has intensified pressure on global oil markets, with experts warning that pump prices in California could soon approach an unprecedented $10 per gallon. Meanwhile, jet fuel costs have surged dramatically, rising nearly 47% within just a fortnight, further straining the region’s transportation sector.
California’s unique gasoline blend requirements and its geographic isolation from the national pipeline network have left it heavily dependent on imported fuel supplies, particularly from Asia. This reliance has become a critical vulnerability as the closure of the Strait of Hormuz—a vital maritime chokepoint—has disrupted shipments and delayed deliveries. As a result, consumers in the state, who already endure the highest gasoline prices in the country, are bracing for even steeper increases and potential shortages.
Energy economist Philip Verleger has described the U.S. West Coast as the “poster child” for the fallout from recent attacks on Iran, predicting imminent shortages of gasoline and diesel. He cautioned that prices could surpass the historic $10 per gallon mark, a figure that would represent a severe economic burden for residents and businesses alike. Over the past month alone, California’s average price for regular gasoline has climbed more than 18%, reaching $5.42 per gallon as of last Friday—significantly higher than the national average of $3.63, data from the American Automobile Association (AAA).
In addition to gasoline, jet fuel prices in Los Angeles—a major hub for domestic and international flights—have soared by over 47%, hitting approximately $3.85 per gallon since the Middle East conflict began. This spike threatens to increase operational costs for airlines and could lead to higher fares for passengers. Verleger also emphasized that West Coast states may need to reduce their gasoline and diesel consumption by up to 20% if exporting countries impose restrictions or bans to safeguard their own domestic fuel supplies.
California’s vulnerability to supply shocks is rooted in its shifting energy landscape. Once a leading oil producer within the United States, the state has seen several refineries either close or transition toward renewable fuel production in recent years, reflecting broader environmental policies aimed at reducing fossil fuel dependence. This transition has increased California’s dependence on imported crude oil and refined products, leaving it exposed to global market fluctuations and geopolitical risks.
The shortage of Middle Eastern crude oil has forced refineries in key Asian countries such as China, South Korea, and India to scale back operations, with some declaring force majeure—a legal declaration that allows suspension of contractual obligations during emergencies. Several nations, including China and Thailand, have temporarily halted fuel exports, further tightening global supplies. Last year, the U.S. West Coast imported a record 128,000 barrels per day of motor gasoline and additives, primarily from South Korea and India, while jet fuel imports totaled around 54,000 barrels per day, with nearly one-third sourced from South Korea.
However, these critical imports from South Korea are expected to dwindle in the near term, and neighboring Washington state lacks sufficient spare refining capacity to compensate. Randy Hurburun, head of refining at Energy Aspects, the region faces significant challenges in maintaining fuel supplies. Additionally, West Coast refineries imported approximately 230,000 barrels per day of Middle Eastern crude oil, accounting for about half of all Middle Eastern crude entering the United States. With these supplies now at risk, refineries must seek alternative sources, which are likely to come at a higher cost.
Matt Smith, an analyst at the ship tracking firm Kpler, highlighted the precarious situation, stating that all Middle Eastern crude shipments to West Coast refineries are under threat. As a result, refineries will be compelled to turn to crude oil from Canada or Latin America. Major California refineries, including Chevron’s facilities in Richmond and El Segundo, as well as Marathon Petroleum’s Los Angeles refinery, were among the largest importers of crude in 2025. While Marathon confirmed it is fulfilling all contractual obligations, it declined to comment on crude sourcing or refining operations. Chevron also refrained from discussing daily operations but assured that its refineries continue to supply customers in the region.
Alternative crude supplies remain limited due to strong demand from Asian markets. Canadian oil availability is constrained by capacity limits on the Trans Mountain Pipeline and competition from Chinese buyers, restricting the volume accessible to West Coast refiners to roughly half a million barrels per day. Asian refiners are also expected to increase purchases of Latin American crude from countries like Ecuador and Guyana, further tightening the market. Smith noted that there is little incremental supply available to meet the West Coast’s growing needs.
To mitigate the shortfall, West Coast refiners plan to maximize the use of Alaska North Slope crude, redistribute Canadian supplies, and potentially import Venezuelan oil despite logistical challenges. Meanwhile, the U.S. government is considering a temporary waiver of the Jones Act, a regulation that mandates domestic crude shipments be transported on U.S.-flagged vessels. This rule has historically increased shipping costs for California refiners sourcing oil from the U.S. Gulf Coast, so a waiver could provide some relief by lowering transportation expenses.
Debnil Chowdhury, head of refining and marketing at S&P Global Energy, underscored the intense competition for available crude barrels, noting that all regions are currently scrambling to secure supplies amid widespread concerns about availability. This heightened competition is driving prices higher and complicating efforts to stabilize fuel markets on the U.S. West Coast.
