Experts’ previous predictions of soaring oil prices in California seem to be gradually coming true. As of Friday, the average lowest oil price in California has approached $6, with prices reaching as high as $8 per gallon in downtown Los Angeles. Industry operators indicate that the closure of major refineries in the state has caused significant pressure on the market.
California has long been known for having the highest gas prices in the United States, but prices exceeding $8 per gallon have raised concerns. On Friday morning, a gas station in downtown Los Angeles displayed prices of $8.29 for regular gasoline, $8.49 for premium gasoline, and diesel.
Chris, the owner of a gas station in Los Angeles, told reporters that both the industry and consumers are currently facing severe fluctuations in oil prices. He mentioned that the direction of events may lead to further increase in oil prices due to refinery closures and ongoing conflicts.
Last year, the Phillips 66 refinery in Los Angeles announced its closure. Now, Valero Energy Corp. plans to shut down its Benicia refinery in the San Francisco Bay Area in April. These two companies collectively account for nearly one-fifth of California’s gasoline supply.
Chris expressed concerns that current focus on oil prices is influenced by the conflict in the Middle East. He noted, “Indeed, over the past month, oil prices have risen rapidly, but about a month ago (before the war began), our oil prices were already close to $6.”
“People are complaining that oil prices are too expensive, but we can’t do much about it,” Chris said, adding that refinery closures will have long-term impacts.
On Thursday morning, smoke and coal ash were emitted from Valero’s refinery in Benicia. The facility has been undergoing chemical cleaning in preparation for its closure in April.
According to a study released by the University of Southern California (USC) in May last year, California’s oil prices could surge by 75% before the end of 2026, mainly due to the closure of multiple refineries in the state leading to a significant decrease in supply. USC Marshall School of Business professor Michael Mische even suggested that oil prices could rise above $8 in the report.
Based on data from the American Automobile Association (AAA) on Friday, the average price of regular gasoline in California is $5.844, higher than the national average of $3.978. In comparison, there are still 36 states where the average gas prices are lower than the national average, with states like Oklahoma and Kansas having average prices of around $3.2 and Texas around $3.6.
Prior to the war, the national average gas price was $2.982 a month ago, while California has already reached a high of $4.642.
There is a significant price difference among various counties in California currently, with regular gasoline prices around $5.92 in Los Angeles County, San Diego County, and Orange County, $5.82 in Riverside County, about $6 in San Francisco in Northern California, and soaring to $6.6 in Mono County inland.
AAA believes that the continuous increase in gasoline demand during the spring break period is another factor contributing to the surge in oil prices.
As the closure of refineries draws near, the California Energy Commission responded to reporters in a mid-March email, stating, “Phillips 66 has indicated that they will continue to supply fuel to the California transportation fuel market… Valero will also provide ample supplies.”
To alleviate supply shortages and rising prices, the Trump administration officially directed Sable Offshore Corp. on the 13th of this month to restart oil fields in California.
The U.S. Department of Energy pointed out that the conflict with Iran has disrupted global oil supplies, especially in the Strait of Hormuz, leading to energy risks for military facilities on the West Coast. Restoring operation of the oil fields aims to ensure military reserves, achieve energy independence, and effectively reduce California’s dependence on foreign crude oil.
The Sebel refinery is expected to produce about 50,000 barrels of oil per day, increasing California’s domestic oil production by 15% and replacing nearly 1.5 million barrels of foreign crude oil per month.
However, California officials and environmental groups are strongly opposed to this. On Monday, the California government filed a lawsuit against the Trump administration to block the restart of offshore oil drilling that has been closed for over a decade. The lawsuit has been submitted to the federal district court in Northern California.
California Attorney General Rob Bonta’s office stated in a press release that the federal action “violates the ‘Administrative Procedure Act’ and infringes on California’s sovereignty rights under the Tenth Amendment.”
Environmental groups have also expressed concerns that forcibly restarting operations could endanger wildlife in coastal areas.