California Refineries Max Out Jet Fuel While Gasoline Starves

Key Points:

• California is facing soaring gasoline prices nearing $6 per gallon due to a shrinking refining base, declining domestic oil production, and disruptions in the Strait of Hormuz, which limit oil product availability from key Asian suppliers.
• The state’s refining capacity has halved since 2000, with recent closures removing 17.5% of local output, while refiners are shifting production toward more profitable diesel and jet fuel at the expense of gasoline amid widening price differentials.
• Imports of gasoline have surged to record levels, particularly from the UK and India, with Indian refineries processing Russian crude to fill the gap, but California’s stringent CARB fuel specifications and limited pipeline connectivity isolate it from broader US supply sources.
• Jet fuel supply is especially strained due to declining Asian exports and rising local demand, causing jet fuel prices in Los Angeles to more than double year-on-year, while planned pipeline projects to improve supply connectivity remain years away.
• Authorities are considering temporary waivers on CARB fuel standards to ease import constraints, but the market faces a long-term structural shift characterized by fewer refineries, rigid regulations, and increased reliance on a strained global supply system.