California has recently experienced a significant increase in fuel imports, reaching their highest level in four years as of May. This trend is largely attributed to refinery outages within the state.
As a result, refiners have turned to historical trading partners in Asia and alternative routes to address the shortages faced by the second-largest oil consumer in the United States. This increase in imports provides insight into the future trajectory of California’s gasoline and jet fuel markets.
The state is expected to increasingly rely on imported fuel following the anticipated closure of major refineries operated by Phillips and Valero by next year. Regulatory pressures and declining gasoline demand contribute to this situation, prompting analysts to predict that California’s refining capacity will diminish faster than the state’s fuel needs decrease.
According to data from the vessel tracker Kpler, California’s total petroleum product imports rose to 279,000 barrels per day (bpd) in May. Of that, around 187,000 bpd, or nearly 70%, originated from South Korea and various Asian exporters, who have traditionally supplied the region.
Recent supply shortages due to outages at refineries owned by Chevron, PBF Energy, and Valero have heightened the need for imports and, consequently, pushed prices higher. Price disparities have reached notable levels, with San Francisco gasoline reported to exceed Gulf Coast pricing by over $40 a barrel.
In addition to traditional trade routes, California’s imports from the Bahamas—a channel infrequently used by West Coast refiners—reached a record of 38,000 bpd in May. This is a significant increase from average flows of just 6,000 bpd last year, resulting from a workaround of the Jones Act, which restricts the movement of goods between U.S. ports.
The disruption of local refining capacities has opened opportunities for new trade routes, though these will likely raise overall fuel costs for consumers in the state. As of the latest figures, California’s retail gasoline prices averaged $4.68 per gallon, a stark contrast to the national average of $3.12.