California's gasoline prices hit record $5.82 per gallon amid supply crisis

Gasoline prices in California have surged to nearly $2 more per gallon than the national average. The spike follows ongoing supply shortages and rising tensions due to the war in Iran. Experts warn the state's fuel situation has reached a critical point after years of refinery closures and high taxes. As of March 2026, California's average gasoline price hit $5.82 per gallon, far above the national average of $3.98. Just a month earlier, the state's average was $4.63, compared to $2.95 nationwide. The sharp increase comes as major energy firms, including Phillips 66 and Valero, operate fewer refineries after recent shutdowns—Phillips 66 closed its Los Angeles facility at the end of 2025, while Valero's Benicia plant is set to stop production in April 2026.

California has lost nearly three dozen refineries since the 1980s, forcing the state to rely on imported fuel, often from Asia. The situation has worsened with the war in Iran, disrupting global oil markets. On top of supply issues, the state imposes a 60-cents-per-gallon excise tax—more than double the US average—along with additional environmental fees totalling 66 cents per gallon. The state also mandates a special low-pollution fuel blend, which further drives up costs. Analysts like Paul Sankey, president of Sankey Research, had already described California's fuel supply as a 'crisis' before the latest price surge.

The combination of refinery closures, heavy taxation, and geopolitical tensions has pushed California's fuel prices to record highs. With fewer local refineries and no immediate relief in sight, the state's reliance on imported gasoline is likely to continue. Drivers now face some of the highest costs in the country, with little indication of prices dropping soon.