Full Breakdown
California Fuel Crunch: Gasoline Shortages Amid Refinery Closures
5/1/2026, 3:13:08 PM
Shrinking Refining Base and Recent Closures
California’s refineries have fallen from 23 in 2000 to 11 in 2026; the November 2025 shutdown of Phillips 66’s 140,000 b/d Wilmington/Carson plant and the April 2026 closure of Valero’s 145,000 b/d Benicia refinery removed about 17.5 % of state capacity. Declining domestic crude production forces reliance on imports for roughly 30 % of refined products.
Shift to Jet Fuel and Diesel as Profits Soar
In April 2026 refiners increased diesel by 16,000 b/d and jet fuel by 20,000 b/d, cutting gasoline by 32,000 b/d. Gasoline output fell to 590,000 b/d, 20 % below a year earlier; jet fuel topped 300,000 b/d. Crack spreads widened to $40–50 /bbl for gasoline, $100 /bbl for diesel and $85 /bbl for jet fuel, leaving jet fuel $35 /bbl more profitable than gasoline.
Rising Imports Amid Global Constraints
With gasoline output shrinking, imports rose to a record 130,000 b/d in March 2026, driven by UK cargoes and Reliance Industries’ Jamnagar refinery, which shipped 960,000 barrels in April. Asian jet-fuel cargoes fell from 40,000 /bd to 17,000 /bd, with only one South Korean vessel in April. Strait of Hormuz disruption and a sanctions “refining loophole” have let Russian-origin crude processed abroad flow into California, adding millions of barrels of CARB-grade gasoline.
Regulatory Environment and Industry Pushback
California’s CARB specs—low sulfur and tight vapor pressure—limit compliant global suppliers. Governor Gavin Newsom’s Low-Carbon Fuel Standard, cap-and-trade, and a 2035 gasoline-car phase-out have cut in-state crude production by 95 % and spurred refinery closures. Industry groups say profit-margin caps and minimum-inventory rules deter investment; Consumer Watchdog president Jamie Court warned, “If we had minimum inventory rules, we would not have this problem.”
Official Statements & Responses
The California Energy Commission said it lacks authority to restrict fuels by source and does not track crude origins. DOE secretary Chris Wright called the Treasury’s sanctions waiver for Russian-origin oil “pragmatic.” Isaac Levi of the Centre for Research on Energy and Clean Air warned refined Russian oil could keep flowing “as long as the Strait of Hormuz remains closed.” Energy Commission vice-chair Siva Gunda said the market can rely on global capacity but warned that falling gasoline demand will likely trigger more refinery closures.
Verbatim Quotes
- “pragmatic.” — Chris Wright, Secretary, U.S. Department of Energy
- “as long as the Strait of Hormuz remains closed,” — Isaac Levi, Europe-Russia Policy & Energy Analysis Team Lead, Centre for Research on Energy and Clean Air
- “If we had minimum inventory rules,” — Jamie Court, President, Consumer Watchdog
- “the market can safely rely on global refining capacity,” — Siva Gunda, Vice Chair, California Energy Commission
What’s Next
California is weighing temporary CARB waivers while the Western Gateway pipeline, slated for 2029, remains years away. The Treasury’s sanctions waiver for Russian-origin oil has been extended through May 2026, preserving an alternative supply line. Analysts project that a sustained 10–15 % supply tightness could push gasoline prices toward $7–$8 per gallon this summer, increasing pressure on consumers and transportation.
