How The Iran War Is Hurting California's Struggling Oil Market

TL;DR

The Iran conflict is worsening California's already fragile oil market, where 75% of crude is imported and gas prices exceed $6 per gallon.

Key Points

• 1.California's gas prices are structurally the highest in the nation. The state's unique cost drivers include the nation's highest gasoline taxes, a cap-and-trade program charging refineries for emissions, a low carbon fuel standard, and a CARB-mandated gasoline blend distinct from EPA-regulated fuels elsewhere.
• 2.California imports 75% of its crude oil and has no pipeline connections to the rest of the U.S. Over a quarter of those imports come from Middle Eastern countries — Saudi Arabia, Iraq, and the UAE — making the state uniquely exposed to Strait of Hormuz disruptions, while a moratorium on new domestic drilling has further shrunk local supply.
• 3.Two major refinery shutdowns have eliminated roughly 20% of California's gasoline production capacity. Only 8 of the state's 12 remaining refineries produce the required CARB blend; diesel has surpassed $7.50/gallon, costing truckers approximately $1 per mile, and a tightening jet fuel market threatens airports like LAX and SFO, risking broader economic damage.