Iran War Drives California Oil Prices to $10

California's mandated gasoline blend and lack of pipeline access make it heavily reliant on Asian energy imports, now hampered by the Strait of Hormuz closure. Energy economist Philip Verleger forecasts imminent gasoline and diesel shortages, pushing prices above $10 per gallon.

Average regular gasoline prices in California jumped over 18% to $5.42 per gallon, significantly higher than the national average of $3.63, according to AAA. Jet fuel in Los Angeles soared 47% to $3.85 a gallon since the conflict began, OPIS data shows.

California's increased dependence on crude and fuel imports, following refinery shutdowns, leaves it vulnerable to supply shocks. A shortage of Middle Eastern crude has forced Asian refiners (China, Korea, India) to cut production and suspend fuel exports.

The U.S. West Coast imported a record 128,000 barrels per day of motor gasoline and additives last year, mostly from South Korea and India, and 54,000 bpd of jet fuel, a third from South Korea, according to Kpler. Korean imports will cease, and West Coast refineries, including Chevron's Richmond and El Segundo and Marathon Petroleum's Los Angeles facility, must now secure costlier alternative barrels from Canada or Latin America, as Middle Eastern oil imports (230,000 bpd) are at risk, per Kpler analysts.

Limited alternative supply exists due to strong Asian demand and pipeline constraints. President Trump is considering waiving the Jones Act to ease shipping from the U.S. Gulf Coast, potentially offering some relief amidst global competition for barrels, as stated by S&P Global Energy's Debnil Chowdhury.