Overview

As gasoline prices in California approach $6 per gallon, the state has turned to importing more gasoline, including fuel derived from Russian oil. This shift comes amid a complicated landscape of local refinery closures and global supply disruptions.

In March, the state saw a record influx of imported gasoline, which provided temporary relief from rising prices. However, the overall supply remains constrained, leading to continued high costs for consumers.

Key details

  • Gasoline prices in California are nearing $6 per gallon due to a combination of factors, including global market pricing.
  • A significant amount of imported gasoline arrived in California by the end of March, slightly easing prices.
  • This influx of gasoline was largely shipped before the Iran War impacted global supply chains.
  • On April 15, the average price of gasoline in California was 30 cents higher than the previous month.
  • California is transitioning towards a clean energy economy, which has decreased demand for refined fuel.
  • Last year marked the lowest gasoline consumption in over 20 years, excluding the pandemic period.
  • Some California oil refiners are closing due to falling demand and insufficient profits.
  • The Phillips 66 Co. refinery in Los Angeles closed last year, and a Valero Energy refinery in Benicia is expected to idle soon.
  • These closures account for nearly 20% of California's crude oil refining capacity.
  • California is increasingly reliant on imported refined products as global crude oil supplies tighten due to the Iran war.
  • Fuel made from Russian oil is being imported, despite U.S. sanctions against Russian-sourced oil.
  • California's top foreign supplier of gasoline is Reliance Industries Ltd.’s Jamnagar refinery in India.

Context

The ongoing conflict in Ukraine and subsequent sanctions on Russian oil have complicated the global oil market, affecting supply chains and pricing dynamics. California's unique reliance on imported gasoline highlights the challenges faced by the state as it navigates its energy transition.

What happens next

As California continues to import gasoline, including that derived from Russian oil, the state will have to manage the implications of these imports on local markets and the broader geopolitical landscape.

What we don't know yet

Details regarding the specific volume of gasoline imports from Russian oil and the exact impact on local refineries and prices in the upcoming months are not confirmed.