California’s Oil Supplies at Risk, Experts Warn

A prominent lobbying organization has raised concerns about California’s oil imports, suggesting that the state might soon face shortages and have to compete with others for oil resources.

Jody Mueller, the CEO of the Western States Petroleum Association, highlighted that the diminishing oil supply in California is likely to spark competition not just with other U.S. states, but also with international markets.

This situation follows the last shipment of oil from a vital Middle Eastern route, with the final tanker from the Strait of Hormuz arriving at Long Beach. Until conflicts in the region are resolved, this represents a critical point for California’s supply.

California officials have acknowledged that the outlook is uncertain, which could lead to considerable increases in gas prices.

Industry leaders express concern that the state’s heavy reliance on overseas crude oil, compounded by ongoing disputes with refineries and major gas companies, puts California at significant risk.

Mueller emphasized that this reliance means higher prices and potential shortages are on the horizon for drivers in California.

“When supply decreases, it’s almost certain that prices will rise. Consumers should be worried,” he stated. He noted that global instability is revealing the fragility of the state’s oil system, driven by various overlapping policies.

California’s fuel infrastructure has become increasingly vulnerable, with multiple refinery closures in recent months. This trend follows years of stringent environmental regulations aimed at promoting renewable energy.

For instance, the closure of the Phillips 66 Wilmington/Los Angeles facility and the Valero Benicia plant has accounted for about 20% of the state’s refining capacity going offline.

Despite initiatives promoting electric vehicles, a vast majority of cars in California—around 90%—still rely on gasoline, complicating the transition to cleaner alternatives.

As refining capacity dwindles, the state has had to increase its dependence on foreign oil, with about 60% now sourced from international suppliers.

Most of these imports come from the Middle East and Asia, including Iraq and Saudi Arabia, traveling through the crucial Strait of Hormuz before arriving on the West Coast.

During a recent Congressional hearing, California’s energy officials stated that if disruptions in the Strait persist, the state has enough reserves to last about six weeks. However, beyond that, the situation looks much less promising, which could drive prices significantly higher.

While Mueller did not explicitly support the six-week assessment, he agreed that if circumstances worsen, supply pressures will certainly escalate.

When asked if fuel prices might increase by another $1 or $2 a gallon, he admitted he “doesn’t have a crystal ball,” but highlighted the vulnerability stemming from the state’s reliance on outside sources.

The unique fuel requirements in California further complicate efforts to stabilize supply, as regulations limit the range of fuel purchases and contribute to rising costs.

Some lawmakers discussed revisiting these specialty blend requirements as a potential long-term solution during a recent hearing.

Mueller remarked that refiners are already investing in producing compliant gasoline, but changing blend specifications could prove challenging given current standards.

Moreover, he urged state leaders to rethink policies that, in his view, make California increasingly unwelcoming to oil producers and refiners.

He cautioned that ongoing regulatory pressure could further weaken the state’s refining capacity, leading to even greater reliance on imports.

“When I see policies that seem to undermine our industry, I don’t think they get the full picture,” Mueller concluded.