California Gas Prices Soar as Iran War Disrupts Imports and Refinery Shutdowns

The ongoing Iran war is causing gasoline prices to skyrocket in California, which already has some of the highest prices in the country. The state's average price per gallon is $6.13, a whopping 36% higher than the national average.

California imports about three-quarters of its oil from foreign nations and Alaska, with roughly 30% coming from the Middle East, particularly Iraq and Saudi Arabia. This dependence on foreign imports has made California vulnerable to global market fluctuations.

The war has disrupted gasoline imports from Asia, and the shutdown of two major oil refineries in recent months has further strained the state's supply chain. As a result, gasoline inventory in California is at its lowest level since 2005, averaging just 9.55 million barrels over the four weeks ending on April 24.

While some experts warn of a potential shortage, others believe that prices will continue to rise until they become unaffordable for some drivers, forcing them to abandon gasoline use altogether. 'Demand destruction' is the term used to describe this phenomenon, where high prices deter buyers and lead to a decrease in demand.

Experts such as Susan Bell, senior vice president at Rystad Energy, and Severin Borenstein, professor of Business Administration and Public Policy at UC Berkeley, agree that California's lack of pipeline infrastructure connecting it to other states is exacerbating the problem.