Mayor of New York Reacts as Gas Prices Hit $12 Per Gallon in California!

California is in quite a bind when it comes to gasoline, and the situation is becoming increasingly dire.

Right now, the state is using about 1.7 million barrels of gasoline a day.

Before some refineries shut down, they could produce around 1.62 million barrels daily, meaning they were already bringing in roughly 100,000 barrels just to keep up with demand.

Now, with major players like Phillips 66 and Valero no longer in the game, California’s refining capacity has taken a nosedive down to about 1.34 million barrels per day.

This drastic reduction means California will need to import 380,000 barrels daily—nearly four times what they had to bring in earlier.

Professor Michael Misha from USC has run the numbers and believes gas prices could spike by as much as 75% from current levels.

He estimates prices could hit $643 per gallon after the Phillips 66 closure and then soar to $843 once Valero shuts down in April.

Economists at UC Davis have corroborated these alarming predictions, noting a 40-cent increase in gas prices immediately following the first refinery closure.

They forecast that as we approach August 2026, when both refineries are shut down, prices could jump by $121 above current rates.

But here’s where it gets really tricky for California.

Unlike other states, they can’t rely on regular gasoline; they use a special fuel blend known as Carbob, California’s unique formula designed to meet stringent emission standards.

Not many refineries in the world can produce it, and you can’t just lift gasoline from Texas or Louisiana because it doesn’t meet California’s environmental standards.

The fuel must come from what’s left of California’s refineries or specialized facilities in places like South Korea, India, or Singapore.

When there’s a 20% drop in local refining capacity, California has to import this special Carbob by ocean tanker, which takes time.

Those tankers must sail across the Pacific Ocean, wait for space at ports like Los Angeles or Long Beach, unload their cargo, and then distribute the gasoline through California’s pipeline network to reach local markets.

Any hiccup in this supply chain can cause immediate shortages and lead to price surges.

The U.S. Energy Information Administration backs this up in their analysis, pointing out that with limited connections to other U.S. refining hubs, the most likely alternative sources for fuel will come from imports, especially jet fuel and gasoline from India and South Korea.

Importing petroleum products isn’t a straightforward solution.

In October 2024, Governor Gavin Newsom took a stand against big oil by signing ᴀssembly Bill 1525 into law, celebrating it as a victory.

This legislation mandated that California refineries always keep a minimum amount of fuel in stock and granted state officials the authority to set acceptable profit margins.

Alongside this, Newsom pushed for SBX12, capping profit margins for refiners, and ABX21, which allowed the state to impose minimum inventory levels and determine when refineries could shut down for necessary maintenance.

Just days after this was signed, Phillips 66 shocked everyone by announcing the permanent shutdown of their Los Angeles refinery, which had been producing 139,000 barrels a day—about 8% of California’s total refining power.

The company argued that market conditions made it impossible for them to keep the facility running.

Then, in April 2025, Valero disclosed it would close its Benicia refinery by April 2026, another heavy hitter in California’s supply, producing 145,000 barrels daily.

Their CEO emphasized how California’s tough regulations around fossil fuels, which had been тιԍнтening for two decades, now created the most challenging environment for businesses in North America.

They simply couldn’t justify the investments required to keep up with the constantly changing rules.

By May 2025, Senator Brian Jones penned an emergency letter to Newsom, warning that if more refineries continued to close, gas prices could skyrocket to $843 per gallon.

He referenced a USC study forecasting price hikes of up to 75% within two years and offered to collaborate with the governor on solutions to avoid worsening the crisis.

Unfortunately, Newsom never replied to the senator.

Fast forward to January 1, 2026, and the situation became even grimmer as around 473 to 500 independent gas stations in California had to shut their doors.

Surprisingly, these closures weren’t due to refinery shutdowns but rather a decade-old state law requiring upgrades to underground gasoline storage tanks.

Senate Bill 445, pᴀssed in 2014, mandated that single-walled tanks be replaced or retrofitted with double-walled ones.

It’s honestly surprising how much it costs to upgrade a gas station, with estimates nearing $2 million for each site, covering everything from replacing tanks to upgrading piping and dealing with permits and the downtime that comes with it.

For smaller operators, those costs can outweigh the worth of their whole business, making it tough to secure loans or fund upgrades themselves.

To help out, the state rolled out the Rust program to ᴀssist with replacing, removing, or upgrading underground storage tanks with loans and grants.

But many station owners felt like the help never showed up in time.

It’s the rural and low-income areas that often take the hardest hits.

These gas stations are not just about fuel access; they’re lifelines for local residents, first responders, and everyday conveniences.

When they shut down, communities miss out on so much more than just gas.

With fewer stations in the mix, compeтιтion takes a hit, which then drives prices up even more.

The California Fuels and Convenience Alliance raised alarms, stating that if these stations are forced to close, the fallout would be serious.

California’s issues ripple out beyond its borders; Arizona gets about 33% of its gasoline from California, while Nevada relies on it for a whopping 88% of its supply.

When California’s system falters, the entire Southwest feels the pinch.

Back in September 2024, seven months before things escalated, Arizona’s Governor Katie Hobbs and Nevada’s Governor Joe Lombardo sent a letter to Governor Newsom expressing serious concerns that California’s refinery regulations would cause fuel shortages and skyrocketing prices across the Southwest.

However, Newsom brushed off their warnings, calling them mere talking points from the oil industry.

Fast forward to the present, and the U.S. Energy Information Administration has confirmed those predictions.

They highlighted that both Arizona and Nevada, which have their unique gasoline blends, receive fuel from California refiners and are now likely to face challenges from the reduced supply.

When big players like Phillips 66 and Valero close down, it creates supply issues for Arizona and Nevada.

Even though they don’t have a hand in California’s policies, their entire operation relies on California’s refineries.

And it doesn’t stop there.

California is home to more than 30 military bases that depend on local fuel production, including major Air Force and Army installations.

These refineries play a vital role in supplying fuel for military needs, not just in California, but for bases in nearby states like Nevada and Arizona.

California is on a rough path regarding fuel supply.

By the time Valero shuts down in April 2026, the state will have lost about 20% of its refining capacity since October 2024.

That’s almost a fifth of what they had, which is definitely raising eyebrows.

California currently relies on importing around 1/3 of its refined petroleum products, and if more refineries close, that reliance only deepens.

ᴀssembly member Stan Ellis pointed out that relying more on international supply chains can be risky, especially if geopolitical tensions flare up.

If countries like China or Russia decide to stop sending crude oil to India, the repercussions would ripple right back to California, affecting military readiness and possibly leading to gas shortages.

Energy analysts are projecting that by 2026, the price of gas in California could settle around $5 per gallon, but during the peak summer driving season, it might hit $8 or even more.

That’s just for regular demand, not accounting for crises like refinery breakdowns or natural disasters.

For a working family that drives about 12,000 miles a year at 25 miles per gallon, that adds up to around $480 a year just for gas.

If the price jumps to $8 a gallon, it skyrockets to $3,400 annually.

Now, if we consider a family earning $60,000 a year, they could be spending nearly 7% of their income on fuel before taxes, and that’s just if they have one car.

If there are two vehicles in the household, well, you can double that.

This problem isn’t about corporate greed or oil companies trying to squeeze us for every penny.

The Federal Trade Commission looked at California’s fuel market in 2024 and found no illegal pricing going on.

Instead, it’s about an energy security issue as California finds itself heavily dependent on foreign suppliers nearly 6,000 miles away.

With imported fuel being so vulnerable to global market conditions—like typhoons in the South China Sea delaying shipments or countries prioritizing their own needs over exports—California is in a tough spot.

This whole mess stems from choices made by politicians who seem to ignore the basic rules of economics.

When you make it too expensive to produce something, it simply stops being made.

And if you regulate an industry so much that making a profit is impossible, that industry is going to pack up and leave.

When that industry is crucial to the economy, losing it creates a real disaster.

California had multiple warnings from leaders in Arizona, Nevada, and even from experts in the field.

Many tried to raise the alarm, but their concerns were brushed off as corporate nonsense.

Now, here’s where it gets really ironic.

California’s tough climate rules were designed to cut carbon emissions.

Yet, the opposite might actually be happening.

Those big ships coming from Asia to California burn some of the dirtiest fuel out there, producing more carbon emissions than if they had refined that fuel right there at home.

While California can tout lower local emissions, the truth is that global emissions have actually gone up.

The pollution simply shifts overseas where it can’t be tracked by California regulators.

Refineries in places like India and South Korea don’t have to play by the same strict environmental rules, and those gasoline supplies are being brought in, even though California has banned its own refineries from producing it profitably.

This isn’t the environmental victory they might think it is; it feels more like a bit of global accounting trickery.

Now, with gas prices soaring, the effects ripple throughout the whole economy.

Transportation costs shoot up, and when diesel hits five or six dollars per gallon, trucking companies have no choice but to raise their rates.

Those increased costs get pᴀssed along to wholesalers, then retailers, and finally to consumers.

That means grocery bills go up because food delivery becomes pricier, and construction costs rise, since materials need to be moved around.

For businesses already grappling with California’s high taxes, strict regulations, and costly real estate, rising fuel prices can be the last straw.

So they start looking for greener pastures in places like Arizona, Nevada, or Texas, where operating costs are easier to manage.

When companies pack up and move, workers often have to follow suit or risk losing their jobs.

In 2020, California saw its population shrink for the first time ever, losing nearly 100,000 residents by 2021.

High housing costs and taxes were pushing people out, and soaring gas prices only made things worse.

It’s often young professionals, skilled workers, and entrepreneurs leaving—the very folks California needs to keep its economy healthy and its tax base strong.

Those who remain are often lower-income individuals who can’t afford to leave or deal with $8 gas prices.

By late April 2025, Governor Newsom finally started acknowledging the crisis.

He reached out to the California Energy Commission, urging them to team up with refiners to come up with both short- and long-term solutions, asking for their recommendations by July 1st on how refineries could operate profitably in the state.

Senator Brian Jones jumped in right away, stressing that there’s no time to waste waiting on another report while gas prices keep climbing and refineries close down.

Interestingly, the California Energy Commission decided to push back the enforcement of profit cap penalties until 2030.

It turns out the very regulations Newsom had supported to protect consumers from price gouging were now delayed for five years.

This was a clear signal that those regulations just couldn’t work in reality, as implementing them could devastate California’s remaining refining capacity.

So, whatever happened to holding big oil accountable?

That initiative seemed to fade away as reality set in.

But delaying enforcement doesn’t bring back the refineries that have already shut their doors, like those of Phillips 66 and Valero, which are now just memories.

Energy experts are pointing out that California has limited choices going forward.

One option would be to loosen its unique carbon fuel blend requirements, allowing the state to import regular gasoline from refineries in Texas and Louisiana.

An economist from UC Davis noted that easing regulatory constraints could help stave off some of the upcoming price hikes, but doing so would contradict California’s climate policies built over the last two decades.

It would mean acknowledging that the regulations might have gone a bit too far.

Another potential path involves offering substantial subsidies to keep the remaining refineries running.

Reports suggest that behind closed doors, California has already been negotiating, ready to offer hundreds of millions in tax breaks and regulatory relief.

But this means taxpayers would end up footing the bill.

California has long been at odds with the oil industry, which has now led to some tough economic times.

It’s hard to believe they could have pushed for such drastic changes without a solid backup plan.

The state is trying to boost electric vehicle use, thinking that if enough people switch to electric cars, the demand for gasoline would drop faster than the supply could dwindle.

Right now, California is ahead of the curve, with nearly a quarter of new car sales being electric.

That’s about 2.5 million zero-emission vehicles cruising around.

But here’s the kicker: 94% of the cars in California are still running on gasoline.

Those drivers need gas right now.

Electric vehicles aren’t going to fill the gap fast enough to dodge the looming crisis ahead.

With gas prices climbing toward $8 a gallon, this is no longer up for debate.

It’s a clear path unless things change, and so far, there are no signs from Sacramento indicating any willingness to shift gears.

People in California really need to ask their elected leaders one straightforward question:

You’ve driven the refineries out.

What’s your game plan to keep working families fueled up?

Sure, it sounds impressive to stand up at a press conference and promise to take on big oil, but that doesn’t help a mother in Fresno trying to get to her job.

It doesn’t fuel the ambulances racing to save lives, nor does it power the trucks bringing food to our grocery stores.

Policy decisions have real consequences, and California is about to face those consequences at the gas pump in a very tough way.