The Iran war is compounding California’s energy crunch

Global energy prices are rising as traffic in the Strait of Hormuz remains more than 90% below the level before February 28, when the Iran war broke out. While the US remains somewhat isolated, domestic prices are also rising, especially in California.

The national average for a gallon of regular gas was $4.13 on Monday, but in California it was $5.89, according to AAA. The price of a gallon of diesel in the state reached a record of $7.75 on April 9.

California has among the highest gas prices in the U.S., in part because of the state’s stricter fuel requirements. But its pipeline connection to the oil- and fuel-rich Gulf Coast is also limited, meaning it has to look abroad for supplies. Almost 75% of the state’s crude oil is imported, and imports also support supplies of gasoline and jet fuel. Some of these products come from South Korea and India, which are experiencing shortages in their stocks due to the loss of oil in the Middle East. In March, South Korea implemented fuel export ceilings.

“We’re concerned about supply on the West Coast,” Andy Walz, Chevron’s head of downstream, midstream and chemicals, told CNBC at S&P Global’s CERAWeek on March 25. “Asia has been one of the first to feel the pain of the loss of crude oil supplies in the Middle East Gulf, and California is being diverted to Asia. They will feel the pain initially in prices because China, Korea or India will not ship oil to California unless the shipping cost is paid,” he said.

“And the second phase of this crisis is that they won’t be able to have the products they want or need. Reliable security of energy supply in California is important to national and economic security,” Walz said. he added.

Watch the video above to learn more about California’s energy struggle.