California leaders are bracing for even higher gas prices statewide within a matter of weeks if the war in Iran persists and the Strait of Hormuz remains closed. State lawmakers in the Assembly Energy and Utilities Committee held an oversight hearing Tuesday on the situation as the war in Iran stretched into its 67th day. The average gas price statewide was $6.11 per gallon, according to AAA. California this year lost two oil refineries that provided 20% of the state’s refining capacity. The state has been relying on even more foreign fuel ever since. The latest state data show most of its crude oil is coming from Asia and South America. Experts have acknowledged the closures mean the state is more vulnerable to price spikes when global conflict disrupts supply. In Tuesday’s hearing, state lawmakers acknowledged the uncertainty ahead for California’s tight fuel supply. About 2 million barrels of oil are in the process of being unloaded in Long Beach off of the last California-bound tanker that got through the Strait of Hormuz. Among those testifying Tuesday was Siva Gunda, the vice chairman of the California Energy Commission who Gov. Gavin Newsom has tapped to oversee the issue. He told lawmakers the state has enough fuel supply to meet demand for the next six weeks. “At least, up to six weeks I do not see a shortfall,” Gunda said. “Beyond that, based on what we’re hearing from the industry, the pricing will move molecules to California, but it will come at a price. And that’s something we need to closely watch.” When lawmakers asked what prices consumers could expect beyond six weeks, Gunda said energy officials expect demand to drop if prices increase, which could potentially stabilize costs. He pinned the number below $7, or around $6.50. Severin Borenstein, an economist and researcher at the UC Berkeley Energy Institute at Haas, told lawmakers it could be another $1 to $2 more per gallon. “Unfortunately, that would be a crisis and completely out of control of the state of California,” Borenstein said. Assemblyman David Alvarez, D-San Diego, asked Gunda if the Newsom administration has an emergency or backup plan in place. Gunda said a lot of conversations are happening related to specific oil and gas-related assets he could legally not disclose because it’s private business information. He confirmed he is in negotiations to ensure California has a stable fuel supply for the next three to six months but did not provide a timeline on when that plan would be made public.The uncertainty around supply serves as a major hurdle as California’s Democratic leaders attempt to cut the state’s reliance on oil and gas in favor of renewable energy. But nearly 90% of registered cars in California rely on gas, state records show. Jodie Muller, the President and CEO of the Western States Petroleum Association, told lawmakers this situation was predictable. The state has increased regulations and scrutiny around the oil industry over the last two decades. In 2023 and 2024, Newsom called special sessions to try to limit how much money oil refiners can make off of California drivers and set new rules for refiners around fuel storage. The governor has claimed the oil industry has been ripping people off in the state. Last year, Phillips 66 and Valero announced they would shut down their refineries. “California’s petroleum system was weakened by design and global events are now exposing just how fragile it has become,” Muller said. In the near-term, Gunda suggested California protect its oil and gas assets. Borenstein suggested the state reconsider its special fuel blend. Borenstein also suggested state lawmakers consider a gas tax holiday, which has been a non-starter for California’s Democratic leaders. He also suggested a possible floating gas tax that decreases when crude oil prices go up or increases when crude oil costs go down. “There’s no question it would help consumers,” he said. See more coverage of top California stories here | Download our app | Subscribe to our morning newsletter | Find us on YouTube here and subscribe to our channelPHNjcmlwdCB0eXBlPSJ0ZXh0L2phdmFzY3JpcHQiPiFmdW5jdGlvbigpeyJ1c2Ugc3RyaWN0Ijt3aW5kb3cuYWRkRXZlbnRMaXN0ZW5lcigibWVzc2FnZSIsKGZ1bmN0aW9uKGUpe2lmKHZvaWQgMCE9PWUuZGF0YVsiZGF0YXdyYXBwZXItaGVpZ2h0Il0pe3ZhciB0PWRvY3VtZW50LnF1ZXJ5U2VsZWN0b3JBbGwoImlmcmFtZSIpO2Zvcih2YXIgYSBpbiBlLmRhdGFbImRhdGF3cmFwcGVyLWhlaWdodCJdKWZvcih2YXIgcj0wO3I8dC5sZW5ndGg7cisrKXtpZih0W3JdLmNvbnRlbnRXaW5kb3c9PT1lLnNvdXJjZSl0W3JdLnN0eWxlLmhlaWdodD1lLmRhdGFbImRhdGF3cmFwcGVyLWhlaWdodCJdW2FdKyJweCJ9fX0pKX0oKTs8L3NjcmlwdD4=
California leaders are bracing for even higher gas prices statewide within a matter of weeks if the war in Iran persists and the Strait of Hormuz remains closed.
State lawmakers in the Assembly Energy and Utilities Committee held an oversight hearing Tuesday on the situation as the war in Iran stretched into its 67th day. The average gas price statewide was $6.11 per gallon, according to AAA.
California this year lost two oil refineries that provided 20% of the state’s refining capacity. The state has been relying on even more foreign fuel ever since. The latest state data show most of its crude oil is coming from Asia and South America. Experts have acknowledged the closures mean the state is more vulnerable to price spikes when global conflict disrupts supply.
In Tuesday’s hearing, state lawmakers acknowledged the uncertainty ahead for California’s tight fuel supply. About 2 million barrels of oil are in the process of being unloaded in Long Beach off of the last California-bound tanker that got through the Strait of Hormuz.
Among those testifying Tuesday was Siva Gunda, the vice chairman of the California Energy Commission who Gov. Gavin Newsom has tapped to oversee the issue. He told lawmakers the state has enough fuel supply to meet demand for the next six weeks.
“At least, up to six weeks I do not see a shortfall,” Gunda said. “Beyond that, based on what we’re hearing from the industry, the pricing will move molecules to California, but it will come at a price. And that’s something we need to closely watch.”
When lawmakers asked what prices consumers could expect beyond six weeks, Gunda said energy officials expect demand to drop if prices increase, which could potentially stabilize costs. He pinned the number below $7, or around $6.50.
Severin Borenstein, an economist and researcher at the UC Berkeley Energy Institute at Haas, told lawmakers it could be another $1 to $2 more per gallon.
“Unfortunately, that would be a crisis and completely out of control of the state of California,” Borenstein said.
Assemblyman David Alvarez, D-San Diego, asked Gunda if the Newsom administration has an emergency or backup plan in place.
Gunda said a lot of conversations are happening related to specific oil and gas-related assets he could legally not disclose because it’s private business information. He confirmed he is in negotiations to ensure California has a stable fuel supply for the next three to six months but did not provide a timeline on when that plan would be made public.
The uncertainty around supply serves as a major hurdle as California’s Democratic leaders attempt to cut the state’s reliance on oil and gas in favor of renewable energy. But nearly 90% of registered cars in California rely on gas, state records show.
Jodie Muller, the President and CEO of the Western States Petroleum Association, told lawmakers this situation was predictable. The state has increased regulations and scrutiny around the oil industry over the last two decades.
In 2023 and 2024, Newsom called special sessions to try to limit how much money oil refiners can make off of California drivers and set new rules for refiners around fuel storage. The governor has claimed the oil industry has been ripping people off in the state.
Last year, Phillips 66 and Valero announced they would shut down their refineries.
“California’s petroleum system was weakened by design and global events are now exposing just how fragile it has become,” Muller said.
In the near-term, Gunda suggested California protect its oil and gas assets. Borenstein suggested the state reconsider its special fuel blend.
Borenstein also suggested state lawmakers consider a gas tax holiday, which has been a non-starter for California’s Democratic leaders. He also suggested a possible floating gas tax that decreases when crude oil prices go up or increases when crude oil costs go down.
“There’s no question it would help consumers,” he said.
See more coverage of top California stories here | Download our app | Subscribe to our morning newsletter | Find us on YouTube here and subscribe to our channel