Californians paying more for gasoline and diesel deserve an explanation that reaches beyond the latest naive and simplistic Iran war headline or political hit piece. As always, today’s prices reflect complicated overlapping pressures: record-high California state taxes, disrupted world supplies, damaged Russian refineries (carried out by Ukraine and funded by NATO and the European Union), California environmental compliance costs, shrinking California refining capacity and transportation bottlenecks. Then this week, China refiners suspended refined exports like gas and diesel until further notice. No president controls every factor,
The consequences extend beyond filling a tank. Diesel powers trucks hauling groceries, farm equipment producing food and businesses delivering materials. Higher transportation costs work their way through every level of the economy. Families pay at the pump and again at the checkout counter. Affordable fuel remains essential infrastructure, regardless of Sacramento’s preferred timetable for replacing it with an alternative.
California’s hostile business environment, which is running out major employers and tax revenue, is also losing refineries. California has lost approximately eight petroleum refineries to closures since 2008. It just is too hard in California. Four significant losses since 2020. Some now produce renewable fuels, but they no longer provide the same conventional petroleum refining capacity.
But gasoline and diesel prices reflect far more than one refinery closure or one war. It’s a global issue. OPEC production decisions and pricing weigh in, as do worldwide demand, shipping disruptions, and trading and price setting in financial centers such as London—home to the ICE Brent oil benchmark—all of which influence crude prices. Political and regulatory choices affecting refinery investment also matter, alongside companies’ business decisions. Blaming any one war, including Iran, overlooks the global market and the domestic policies that shape what drivers pay.
Californians have experienced comparable gasoline prices before. According to AAA, the statewide average for regular gasoline reached approximately $6.44 per gallon in June 2022, during President Joe Biden’s administration. On Oct. 4, 2026, it stood at approximately $6.39—just 5 cents below that earlier peak, without adjusting for inflation. Diesel, however, has set new records this year. Those comparisons reinforce the point: painful fuel prices can occur under either party’s leadership.
International conflict is a major immediate driver. The U.S.-Israeli war with Iran and disruptions around the Strait of Hormuz have restricted oil shipments and increased uncertainty, although the oil shipping through the strait is at the same level it was before the “conflict” started. Iran blowing up the pipelines of its neighbors also affects pricing and distribution. The International Energy Agency describes the Middle East conflict as creating an unprecedented supply disruption. Oil trades globally, so American production does not insulate American consumers from overseas losses.
Ukraine’s attacks on Russian refineries compound the problem, particularly for diesel. Reuters reported that three of Russia’s six largest diesel-producing refineries sharply reduced or halted production in September following drone attacks. And Ukraine is promising more. Russia subsequently extended restrictions on diesel exports through October. Whatever the military justification, removing refining capacity and export supplies tightens the worldwide fuel market.
California adds its own expensive complications. The California Energy Commission identifies taxes, environmental program costs, specialized gasoline requirements, and an isolated transportation fuels market as reasons residents pay more. Cleaner fuel provides air-quality benefits, but producing it costs money and limits replacement suppliers. Overseas shipments can take three weeks to arrive, making it difficult to respond quickly when local supplies fall short.
Taxes deserve scrutiny, too. Federal, state and local taxes contribute to the price of fuel, while California’s environmental programs impose additional compliance costs reflected at the pump. These costs help explain the state’s persistently higher prices, although they do not explain every sudden increase. Policymakers should acknowledge the cumulative burden instead of discussing each charge as though families pay it in isolation.
Refinery losses make that vulnerability worse. Phillips 66 began winding down its Los Angeles refinery in late 2025, while Valero announced it would cease Benicia operations by April 2026, citing regulatory challenges and high costs. Earlier conversions to renewable fuels also reduced conventional petroleum refining capacity. These changes leave fewer facilities available when equipment fails, maintenance interrupts production or natural disaster strikes.
Importing crude oil and importing finished gasoline are different solutions to different shortages. Crude requires a refinery before it becomes motor fuel. When California loses refining capacity, securing additional crude alone cannot replace the gasoline and diesel those facilities previously produced.
Sacramento’s campaign to force drivers toward electric vehicles deserves scrutiny. Its attempted phaseout of new gasoline-only vehicle sales faces federal opposition and litigation, but the policy direction is unmistakable. In our view, discouraging long-term petroleum investment while millions of people still depend on gasoline and diesel invites avoidable hardship. Maintaining existing refineries and evaluating replacement capacity should accompany any transition.
Electric vehicles can reduce petroleum demand over time. But families cannot all replace their cars immediately, and farmers, truckers and employers still need dependable fuel supplies. A responsible transition must account for the vehicles people actually own, and the equipment businesses actually operate.
President Trump deserves credit for pressing allies to help relieve the shortage. On Oct. 2, G7 countries agreed to release 100 million barrels of diesel and crude from their reserves following U.S. pressure. The agreement can ease immediate pressure, but reserves cannot permanently replace production and refining.
Argentina supplies another useful source of crude. California Energy Commission figures show Argentine oil represented about 9% of California’s foreign crude imports in 2025. Those supplies diversify purchasing options and demonstrate that Argentine crude was already reaching California before the current crisis. But imported crude still requires functioning refineries to become usable fuel.
Biden’s first-day cancellation of Keystone XL also merits criticism. On Jan. 20, 2021, he revoked permission for an unfinished project designed to carry 830,000 barrels of Canadian crude daily to Nebraska, connecting with the broader pipeline network. He did not shut down an operating pipeline. Had the project been completed, it could have strengthened continental supply options.
The broader lesson is that energy infrastructure takes years to develop, while shortages can happen suddenly. Pipelines, refineries, storage and reliable trade relationships provide options when war or equipment failures disrupt supplies. Allowing those options to narrow carries consequences.
California needs reliable supply, realistic transition planning and transparent costs. Environmental goals should advance alongside the affordable energy households and employers still require. Leaders should protect consumers by preserving practical supply options, examining the combined burden of taxes and regulations, and ensuring that replacement energy is ready before existing capacity disappears.
Venezuela and Russia also fit into the supply equation. Venezuela’s heavy crude suits many U.S. Gulf Coast refineries, and expanded access provides another source when Middle Eastern shipments are disrupted. The Trump administration also temporarily eased sanctions on certain Russian oil cargoes already aboard tankers, seeking to keep existing supplies moving and stabilize global prices. These measures illustrate the difficult choices governments face: making more oil available can ease shortages, while also benefiting exporting countries whose conduct prompted sanctions in the first place.
European governments supporting Ukraine should also help address the economic consequences of the war, including fuel shortages aggravated by attacks on Russian refineries. Trump’s pressure helped secure a G7 emergency reserve release to ease those shortages. In our view, asking allies to share that burden was reasonable, even though the agreement was not publicly established as compensation for European involvement in the attacks.
So, while we decide on wind or solar and battery backup plants, or nuclear, one thing is clear, we need to have sound, pragmatic policies supporting the type of energy we use right now and protect it at least a couple of decades into the future.
