California’s Fuel Supply Under Strain: Industry Leaders Warn of Policy-Driven Shortages and Rising Prices

At a recent hearing, WISPA President Jody Mueller said California’s gasoline reserves cover six weeks of demand and warned that a prolonged Strait of Hormuz closure could lift pump prices, exposing the state’s fragile fuel system.

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Mueller linked the fragility to decades of layered policies that favor fuel imports and have shuttered in-state refineries. The war in Iran and Hormuz shipping limits have widened the supply-demand gap.

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California has the highest gasoline prices, above Hawaii, and reduced supply could add $1-$2 per gallon for consumers.

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Higher pump prices pressure household budgets and can curb spending, while oil firms need long-term policy certainty to justify refinery upgrades in California; short-term rules risk prompting exits.

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California Energy Commission Vice Chair Sevagunda affirmed a six-week supply estimate and warned of price volatility if Hormuz remains closed. Governor Newsom’s administration stressed climate-reduction goals, citing supply concerns. CARB scheduled a May 28 hearing on its Cap and Invest program, which offers no post-2030 guarantees. Seva Gunda said he is keeping stakeholders informed.

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WISPA says recent policies artificially lower in-state supply, giving imported fuels an uneven playing field, and doubts a proposed gas-tax holiday, calling it a temporary fix that would soon revert to higher rates.

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Sources disagree on a gas-tax holiday’s impact; Professor Borenstein says it needs a reinstatement mechanism, while industry doubts its lasting effect. CARB’s short-term allowance timeline leaves post-2030 guidance unclear.

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• “The global disruption that we are seeing is really just exposing our system and showing how fragile it is because of all of the policies that we've had over the decades of layered policies on top of each other.” — Jody Mueller, President, WISPA

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• “California Energy Commission Vice Chair Sevagunda, uh, told * panel of lawmakers this week that California essentially has 6 weeks' worth of supply to meet demand, and then beyond that there are basically * lot of questions.” — Sevagunda, Vice Chair, California Energy Commission

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• “We saw *** slew of bills this year, some that we're still having conversations around some we were able to have some honest conversations about the impact they would have, but when we see policies being proposed like that that will be so detrimental to this industry, I don't think that they're getting the message.” — Jody Mueller, WISPA

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CARB’s May 28 hearing will review the Cap and Invest program’s future scope. The June primary and subsequent general election could reshape California’s regulatory agenda. Industry groups say they will continue lobbying for longer-term policy certainty to protect refinery operations and keep gasoline affordable.

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