Summary

- - Click here to listen to this article - Share via The last California-bound oil tanker to pass through the Strait of Hormuz since war erupted is at the Port of Long Beach offloading its valuable cargo — 2 million barrels of crude destined to be transformed into gasoline, jet fuel and diesel. The New Corolla loaded up in Iraq on Feb. 24 — just days before U.S. and Israeli forces launched attacks on Iran, plunging the region into turmoil and sparking a double blockade of commercial shipping. In two weeks, the Hong Kong-flagged tanker will have fully unloaded at the Marathon Petroleum terminal and departed again for distant waters. After that, California must figure out how to replace some 200,000 barrels of oil a day that will no longer be arriving from the Persian Gulf. California’s own supply of crude oil has been declining since the 1980s, due to aging fields and a geology that makes drilling particularly costly. The state’s gasoline refining capacity is also falling off, increasing reliance on imports and highlighting California’s status as an isolated energy island without gas pipelines to bring in supply from other states. Now, with the end of the Middle East conflict nowhere in sight and the average cost of California gasoline topping $6 per gallon, some lawmakers are warning of potential oil and gas shortages. As Los Angeles homeowners proceed with rebuilding from the 2025 fires, a new trend is emerging across the Palisades and Eaton burn areas. Emergency orders allow “like-for-like” replacements; some residents are moving toward all-electric home rebuilds. So far during the Iran war, oil deliveries to California have remained relatively steady. The state imports about 75% of its oil from foreign countries and Alaska. Last year it brought in a mix from Brazil, Iraq, Guyana, Canada, Ecuador, Argentina and Saudi Arabia as its top international suppliers, with about 30% coming from the Middle East. In March and April, that mix didn’t change much, with California receiving about 21% and 14% of its foreign oil from Iraq and Saudi Arabia, respectively, according to the data analytics firm Kpler. Shipments that left before Iran blocked off the Strait of Hormuz in late February have continued to arrive on a one-to-two-month lag time, about the same time it takes for a tanker to make the voyage. But if the strait remains closed through May, “all bets are off,” said Ryan Cummings, chief of staff at the Stanford Institute for Economic Policymaking. “Refineries have to source from elsewhere, and they are scrambling to find where to get that oil,” said Susan Bell, a senior vice president at the consulting firm Rystad Energy. “They don’t have very many options.” It’s too early to say how California refineries — the state’s main crude oil importers — plan to backfill the loss of Persian Gulf oil. Refiners typically plan their sourcing about two months ahead, said Bell. But Chevron would not share its supply plans, describing them as “material to our business.” And the state’s other top refiners did not reply to requests for comment. Bell said refiners are probably looking to import or have already made plans to import more oil from the countries where they already sourced crude, like Ecuador and the west coast of Canada, where freight fees are lower because of the shorter travel distance. “They would definitely look to Brazil for the medium grades,” said Bell, noting that the oil being lost is the heavy- and medium-grade crude preferred by most California refineries. “Guyana might be a little bit too light for them to want to ramp up, but you know, a liquid barrel is a liquid barrel, so maybe they won’t be too fussy about the quality.” Cummings said it’s possible California refiners can outbid other countries competing over the same barrels for a period of time, but there’s only so much to go around. “We’re looking at 800 million to a billion barrels cumulative loss of production,” said Cummings. “That’s just incredibly tight.” Already, China, Thailand, South Korea, Pakistan and other countries have scaled back or banned gasoline exports to protect domestic supply in the face of oil shortages and rising costs that make it too expensive to produce. PG&E is overcharging Californians to keep the last nuclear power plant open, report alleges Eliminating fees for Diablo Canyon from 2027 to 2030 could save utility customers an estimated $1.84 billion. Some California lawmakers have been sounding the alarm about potential supply shortages of both oil and gas in the months ahead. The California Energy Commission said it is “working closely with refiners” and is “aware they are identifying and using alternate routes and sources of crude.” Spokesperson Nikki Woodard said the agency is confident in the state’s oil supply outlook, which includes refinery stocks and additional storage, for the next six weeks. “We went into this with pretty healthy inventories, but those are being drawn down, and that’s when it gets really precarious,” said Cummings. Data about shipments already traveling on the water can give a preview for what’s en route. Besides the New Corolla, one tanker that left Iraq a month before the war began has been anchored off Long Beach since March, but nothing else from the region is coming. Saudi Arabia has been able to circumvent the Strait of Hormuz with shipments from the Red Sea, but none of those barrels are headed to the West Coast. Matt Smith, an analyst at Kpler, said Argentina, Ecuador and Brazil already have some crude on the way, but its too early to see any scaling up of volumes to match those being lost. Unlike fuel coming from Asia or the Middle East, cargoes from Canada or Latin America “could still load now and discharge next week,” said Smith. California also imports gasoline in amounts that have been sharply increasing since the Valero Benecia refinery went idle in February and the Phillips 66 Wilmington refinery went offline in December. The PBF Martinez refinery, taken out by a fire in February 2025, has yet to come back online. While in 2024 California imported about 10% of its gasoline, it now imports 20%. The top California gasoline suppliers by far are South Korea, the Bahamas and India. As with oil, the shipments have continued to arrive through April, but that’s set to change. South Korea has virtually suspended jet fuel shipments and cut back exports of gasoline and diesel. India has raised export duties on finished fuel products and is also sending out less. “We’re seeing very little on the water heading to the West Coast,” said Smith. The Bahamas, where gasoline from the U.S. Gulf Coast gets rerouted, might pick up some of the slack, but how much remains to be seen. “There’s just a big question mark about where gasoline is going to be pulling in from next,” said Smith. The Energy Commission said the state is forecasting liquid gasoline supplies through May. “We expect to see increased imports in June as the market adapts to the new supply reality resulting from the conflict in Iran,” said Woodard. Jamie Lewis, an oil analyst with Wood Mackenzie, a global research and consulting firm, said she “would expect to see prices increase sharply before we would see any shortages in California.” Kate Gordon, who runs the economic policy nonprofit California Forward and was previously a climate advisor to the Biden and Newsom administrations, said the only way for California to reduce it’s exposure to global oil price volatility is through strategies like investing in electric vehicles and infrastructure. “Even in Texas, where they obviously have a huge amount of drilling and a lot of supply, prices are going up because the sellers are selling to whoever is paying the most during a moment of restriction, and everyone’s facing restrictions all over the place,” said Gordon. “The only way to be less dependent on this global system is to reduce oil demand.”