California's energy policies have led to the state having the highest gas prices and among the highest electricity costs in the nation, with a significant portion of its gasoline now imported from Asia, according to critics. This situation, they contend, is exacerbated by a reduction in in-state refining capacity and a unique fuel blend requirement that limits supply options.
Over the past two decades, California's refinery count has fallen from 20 to 11, with facilities closing due to what are described as burdensome regulations and costs. Recent closures, including Phillips 66's Los Angeles refinery and Valero's Benicia facility, have eliminated approximately 17 percent of the state's refining capacity in under two years. This decline means California now burns more gasoline than it can refine domestically, necessitating imports.
The Institute for Energy Research noted that California is now importing 20% of its gasoline from Asian refineries, with imports of refined products increasing by 36% this year. Critics argue that this reliance on long-distance shipping is not environmentally friendly and leaves the state increasingly dependent on suppliers operating in volatile geopolitical markets. This dependency is seen as a vulnerability, particularly when combined with global events such as the closure of the Strait of Hormuz.
During the recent conflict involving Iran, as the Strait of Hormuz faced potential disruption, California's gas prices rose sharply. While Governor Gavin Newsom attributed the price hikes to oil company "greed," market "speculation," and global turmoil, critics assert that his administration's policies bear significant responsibility. The state's requirement for a specialized fuel blend, used by few other regions, prevents supply from being easily rerouted from other parts of the United States in emergencies. Furthermore, imports from other foreign sources like Iraq and Saudi Arabia also face challenges when transit chokepoints like the Strait of Hormuz are affected.
This reliance on imported fuel, particularly from Asia, occurs as China builds a global energy and finance system. China is a major purchaser of Iranian oil and a key broker of Russian energy deals. Critics argue that California's energy choices have inadvertently created a situation where its fuel supply is more exposed to geopolitical pressures, potentially benefiting adversaries.
Critics contend that California officials made deliberate choices to reduce in-state refining capacity faster than demand decreased and to mandate a unique fuel blend. They argue these decisions, coupled with a disregard for warnings about the risks of relying on imports, have left the state vulnerable. A robust domestic refining base and flexible regulations, they suggest, would better insulate the state from such disruptions. The current situation, according to this view, leaves ordinary Californians paying a premium for policies that have ceded control of the fuel supply to potentially hostile foreign governments.