Los Angeles drivers are now paying $5.64 a gallon for regular gasoline, up 24 cents in ten days, and the people who actually understand energy markets are telling you this is not the normal kind of price spike you wait out. US refineries are running at 96% capacity, the Strategic Petroleum Reserve is at its lowest point since 1983, and the global shipping routes that keep fuel moving are either closed, threatened, or on fire. Literally.
Ten Days Straight, No Signs of Stopping
The Los Angeles County average for a gallon of self-serve regular climbed 2.2 cents on Friday to $5.645, the tenth consecutive daily increase, according to AAA and the Oil Price Information Service. That follows a 3.1-cent jump on Thursday alone. Prices are now $1.165 higher than they were one year ago.
It is not just LA. AAA's Walnut Creek office reported $5.76 per gallon in San Francisco, $5.58 in Oakland, and $5.57 in San Jose. California's statewide average hit $5.59, up 17 cents from last week, which makes it the highest state average in the country. Every state. The whole country. California is winning this particular competition and nobody wanted to win it.
And here is the part that should make you put down your coffee: analysts are not saying the market is correcting. They are saying the system has almost no ability to absorb the next bad thing that happens.
The Strait of Hormuz Is Still a Mess
The root cause is not complicated, even if the geopolitics behind it are. Iran closed the Strait of Hormuz back in February, cutting off a shipping route that carried about one-fifth of the world's oil supplies. The New York Post reports that although traffic briefly resumed after a ceasefire last month between the US and Iran, renewed fighting has frozen it again.
Meanwhile, Houthi rebels have threatened the Red Sea route that Saudi Arabia uses to move most of its crude exports. Ukrainian drone strikes have chipped away at Russia's refining capacity, and Moscow responded this month by banning diesel exports entirely. Pick a global pressure point and it is currently making fuel more expensive.
US wholesale diesel futures are up 26% this month. The profit margin refiners are making for converting crude into gasoline and diesel has hit a record high. The people processing the fuel are doing great. Everyone else is not.
Refineries Are Already Running Flat Out
The United States tried to compensate for the global supply shock by cranking up domestic refining. According to the US Energy Information Administration, refineries are now running at 96% of total capacity, with plants in the Midwest and Rocky Mountain regions at 100%. There is nowhere left to turn the dial.
Joe DeLaura, senior energy strategist at Rabobank, described the situation to the Financial Times with an analogy that should probably be on a billboard somewhere. "The US export increase is helping but it's a band-aid on a big gunshot wound," he said. "We're trying to make up this deficit by running all out, but that means the second refineries go down that's really bad."
This is the part where the experts stop giving you confident predictions and start giving you very worried conditionals. "If" something else breaks. "If" another facility goes offline. A system running at maximum capacity is not a system with room for accidents, and industrial systems have accidents.
The Strategic Petroleum Reserve Is Almost Gone
In March, Washington pledged to release 172 million barrels from the Strategic Petroleum Reserve to cushion the supply shock from the Hormuz closure. As of now, the New York Post reports, about 77% of that pledge has already been drawn down. The reserve, held in underground salt caverns in Texas and Louisiana, is sitting at 311 million barrels, its lowest level since 1983.
Industry analysts estimate the operational minimum for the reserve is somewhere between 180 and 200 million barrels. Below that threshold, further withdrawals start risking infrastructure damage and pipeline disruptions. The United States still has a buffer, but it is shrinking, and the government has already burned through most of its emergency ammunition.
Sean Vale, an energy market analyst at Rystad Energy, asked the Financial Times the question nobody in Washington seems to want to answer: "Commercial stocks are at tank bottom, US SPR stocks are potentially going to approach tank bottom, where is the flexibility to react to additional escalations?" Great question, Sean. Genuinely great question.
California Was Already Starting From Behind
Here is the thing about California that makes every national energy crisis hit differently here. The state's taxes, environmental regulations, and geographic isolation from the main US fuel distribution networks have baked in a structural premium that keeps California pump prices more than $1.50 a gallon above the national average under normal conditions. There is no normal conditions anymore, but even in the old normal, Californians paid a penalty that drivers in Texas or Ohio never had to think about.
So when a global supply crunch pushes the national average up 20 cents, California drivers feel that 20 cents plus whatever the existing premium is. Every disruption is amplified. The baseline is already punishing, and the disruptions keep compounding on top of it.
Drivers in San Francisco are now paying $5.76 per gallon. San Francisco. Where the car is already an object of mild social embarrassment and public transit is theoretically an option. Imagine what it looks like in the Central Valley, where people drive because there is no other choice and the median income is a fraction of what it is in the Bay Area.
The Dingo Take
Let's be clear about what is happening here. This is not a market blip. This is not seasonal refinery maintenance or a random pipeline hiccup that resolves itself in two weeks. The United States has burned through three-quarters of its emergency oil reserves in a few months, refineries are physically running as hard as they can, and the global shipping routes that keep petroleum moving are being closed by wars that show no signs of ending. The experts quoted in this reporting are not being alarmist. They are describing a system that has used up most of its shock absorbers.
The political dimension of this is something the current administration is going to have to answer for eventually. The Strategic Petroleum Reserve exists precisely for moments like this, and releasing 77% of a 172-million-barrel pledge sounds like decisive action until you do the math on what is left and realize you have almost nothing in reserve for the next crisis. Burning emergency stockpiles to manage a crisis that is still escalating is not a strategy. It is a prayer.
California drivers are paying $5.64 a gallon today. If another refinery goes down, if the Hormuz situation deteriorates further, if the Houthis follow through on their Red Sea threats, that number goes up again. The experts are not predicting stability. They are telling you the system has no cushion and hoping the next shock does not arrive before something changes. Hope is not an energy policy.
