California’s Growing Fuel Import Dependency and Supply Vulnerabilities

California’s fuel supply system is facing unprecedented strain as the state grows increasingly dependent on imported gasoline and jet fuel following the closure of two major refineries, according to market data and industry analysts. The shift has left the state vulnerable to global supply disruptions, price volatility, and long-term structural challenges in its energy infrastructure.

Refinery Closures Reduce Local Production

The closures of Phillips 66’s 139,000-barrel-per-day (b/d) Los Angeles refinery and Valero’s 145,000-b/d Benicia facility have removed approximately 17% of California’s refining capacity over the past seven months, according to data from Argus Media. These shutdowns, driven by regulatory pressures, high operational costs, and declining gasoline demand, have forced the state to rely more heavily on imported fuel to meet consumer and industrial needs.

“California’s refining capacity is shrinking faster than its fuel demand is declining, forcing the state into a long-term import-dependent position,” said Sumit Ritolia, an analyst at Kpler, a trade analytics platform. The reduction in local output has created a structural gap that imports have struggled to fill consistently, particularly during periods of high demand or supply chain disruptions.

Imports Surge, But Vulnerabilities Remain

To compensate for the lost refining capacity, California has significantly increased its fuel imports. Total refined product imports to the western U.S. Rose to nearly 345,000 b/d between January 1 and April 10, 2026—a 38% increase compared to the same period last year, according to estimates from the U.S. Energy Information Administration (EIA). California’s gasoline imports alone reached 142,000 b/d in March 2026, nearly triple the volume imported during the same month in 2025.

The majority of these imports originate from South Korea and other Asian exporters, which have historically been key suppliers to the West Coast due to its geographic isolation from Gulf Coast refineries. However, this reliance on overseas shipments exposes California to risks such as shipping delays, geopolitical tensions, and fluctuations in global oil prices.

The war in the Middle East has further exacerbated these vulnerabilities. Tightening regional supply and higher underlying Nymex Rbob (Reformulated Blendstock for Oxygenate Blending) values have pushed gasoline prices to multi-year highs. On April 21, 2026, Los Angeles regular Carbob (California Reformulated Gasoline Blendstock for Oxygenate Blending) differentials reached 60 cents per gallon, up 41.25 cents from pre-war levels. San Francisco’s Carbob differentials climbed even higher, to 66 cents per gallon—an increase of 41.5 cents since the conflict began. Outright prices for regular Carbob in Los Angeles and San Francisco stood at $3.81 and $3.79 per gallon, respectively, up from $2.47 and $2.53 per gallon on February 27, 2026.

Inventory Levels Drop, Increasing Price Volatility

California’s fuel inventories have also declined sharply, leaving little buffer to absorb supply disruptions. Lower reserves make it harder for the state to respond quickly to unexpected demand spikes or delivery delays, increasing the risk of price volatility and localized shortages. Even minor import delays can now have outsized impacts on gas station availability and consumer costs.

Recent refinery outages at facilities owned by Chevron, PBF Energy, and Valero have further tightened supplies, according to traders and analysts. These disruptions have driven prices in the U.S. Pacific Northwest to unusually high levels, with San Francisco gasoline trading at more than $40 per barrel above Gulf Coast pricing on several occasions in 2026—nearly double the year-to-date average of $21.

Long-Term Solutions Remain Years Away

While Phillips 66 and midstream company Kinder Morgan are developing a midstream project aimed at alleviating some of the supply pressures, the initiative is not expected to come online for several years. In the meantime, California’s fuel market remains highly sensitive to global events, from geopolitical conflicts to shipping bottlenecks.

“We have seen tighter supplies due to several refinery outages,” said Alex Hodes, an oil analyst at StoneX. “That boosted prices in the U.S. Pacific Northwest substantially and led to increased imports.” The situation underscores the broader challenges facing California’s energy transition, as the state balances environmental goals with the need for reliable and affordable fuel supplies.

Broader Implications for U.S. Fuel Markets

The developments in California offer a preview of what may lie ahead for other U.S. Fuel markets, particularly those on the West Coast. As regulatory pressures and economic factors push more refineries toward closure, states may increasingly turn to imports to meet demand—even as global supply chains face their own uncertainties.

For now, California’s fuel system remains in a precarious position, with high prices, low inventories, and a growing dependence on foreign suppliers. Without significant investments in infrastructure or policy adjustments, the state’s energy challenges are likely to persist, with consumers bearing the brunt of the instability.