(Zero Hedge)—The Gulf energy shock is exposing the consequences of California’s economic mismanagement under the state’s one-party rule of Democratic kings and queens. Years of failed “green” policies, regulatory overreach, high taxes, endless environmental mandates, and heavy reliance on Asian refineries have transformed California into an energy island highly vulnerable to global fuel shocks, with San Francisco becoming the first U.S. city on Saturday to top $8 a gallon for diesel.
“For the first time ever, GasBuddy data show average diesel prices have risen above $8 per gallon in San Francisco, CA, the first U.S. city ever to reach the $8 mark,” Patrick De Haan of the fuel-tracking website GasBuddy wrote on X.
De Haan noted, “The national average price of gasoline is $4.10/gal this morning, with diesel at $5.58/gal. Both are likely to tick slightly lower today, but a large round of price cycling will begin tomorrow in potentially a dozen or so states, pushing prices back up.”
California has always been an outlier among states in terms of fuel prices. As we have outlined in recent weeks, it was only a matter of time before prices soared in the Golden State to levels that would cause demand destruction.
Last month, Chevron’s head of oil refining, Andy Walz, explained that California is careening toward an energy crisis due to the war in Iran. He said the company may reduce oil refining in the state unless officials roll back taxes and regulations, which is unlikely to happen as long as Democrats remain in power.
Walz said the state is highly exposed to the energy shock rippling across commodity markets because it imports about 20% of its refined fuels from Asia. But, as extensively discussed here, oil product shipments from China, South Korea, Singapore, and elsewhere are at risk of slowing if the Hormuz chokepoint remains clogged, as well as of panic-driven hoarding of fuel by countries. This only leaves Asian nations dialing back crude product exports, exposing California to changes in overseas flows.
Walz said fuel shortages in California are his worst fear: “We have refineries in Asia that are having to cut crude, so they’re going to make fewer products. What if San Francisco doesn’t have the jet fuel it needs? Or Los Angeles? Or maybe gasoline?”
Put another way, California functions as an energy island within the U.S., cut off from the core refinery hubs of Texas and Louisiana. That issue comes as multiple refineries in California have shuttered in recent years because of climate-related regulations and a broader regulatory regime that continues to kill the state’s energy complex.
Even CBS News California was forced to acknowledge last week that a six-month investigation found that state left-wing policies, refinery closures, and global supply risks transformed California into an energy island, highly exposed to disruptions in global fuel flows.
California’s reliance on overseas fuel imports is a major policy failure by state leaders. It also reinforces what JPMorgan analysts have been warning: as the energy shock ripples from Asia to Africa to Europe, California was always likely to be one of the first places in the U.S. to feel max pain. Diesel above $8 per gallon may be the most apparent signal yet that the shock has arrived.
For years, Democrats in the state were able to deflect blame for price gouging onto oil companies. That narrative has since collapsed under the weight of left-wing climate policies that have undermined California’s energy complex. After years of failed governance under left-wing rule and Gov. Newsom, the state now faces a far more serious risk: a fuel shortage that could evolve from an economic crisis into a national security concern, particularly if supply disruptions begin to impair readiness at key military bases across California.
