California Gas Prices Exceed $5 Per Gallon During Iran War

California drivers woke up on Monday, March 9, 2026, to a jarring new reality: the average price of a gallon of regular gasoline had crossed $5.20, a 17-cent overnight spike that turned fuel pumps across the state into sites of anxiety, anger, and growing economic dread [1]. In Los Angeles County, the average hit $5.17, while one Chevron station in downtown LA posted a staggering $8.21 per gallon [1]. The immediate cause is unmistakable — the joint U.S.-Israel military strikes on Iran that began February 28 have cascaded into the largest oil supply disruption in modern history [2]. But for Californians already battered by the nation's highest gas taxes, disappearing refineries, and an isolated fuel supply chain, the war has poured accelerant onto a fire that was already burning.

The Spark: Eight Days That Shook the Oil Market

The crisis traces to February 28, 2026, when the United States and Israel launched coordinated military strikes against Iran, including the targeted killing of Supreme Leader Ali Khamenei [3]. Iran's response was swift and devastating to global energy markets. By March 2, the Islamic Revolutionary Guard Corps had officially declared the Strait of Hormuz closed, threatening any vessel attempting passage [4].

The Strait of Hormuz is the world's most critical oil chokepoint. Roughly 20% of global daily oil supply — approximately 21 million barrels per day — transits the narrow waterway between Iran and Oman [4]. When Iran made good on its threat, attacking at least 10 vessels including the oil tanker Skylight north of Khasab, Oman (killing two Indian crew members), tanker traffic plummeted by 70% almost immediately, then ground to a near-complete halt [4][5].

The market response was explosive. Crude oil prices surged roughly 50% from pre-war levels. Brent crude futures spiked to an intraday high of $119.50 per barrel, while West Texas Intermediate (WTI) crude hit $119.43 before settling above $100 [6][7]. By March 9, oil was trading at roughly $101 per barrel, more than double where it had sat just weeks earlier [7].

Source: EIA / U.S. Energy Information Administration

Data as of Mar 5, 2026CSV

"This is the biggest oil supply disruption in history, more than double the previous record," according to an analysis by consulting firm Rapidan Energy cited by CNBC [2]. The disruption has dwarfed previous crises including the 1973 Arab oil embargo and the 1990 Iraqi invasion of Kuwait.

California: Ground Zero for Pain at the Pump

While the entire nation has felt the sting — the national average jumped nearly 50 cents in a single week to $3.48 per gallon [8] — California occupies a uniquely vulnerable position. The state's average price of $5.20 per gallon sits a full $1.72 above the national average, a gap that reflects not just geopolitics but decades of policy choices and structural constraints [9].

California levies the nation's highest combined gas tax at 70.9 cents per gallon, encompassing a $0.60 state excise tax, $0.10 in sales tax, and a $0.02 underground storage tank fee [10]. Environmental compliance costs — including the state's Cap-and-Trade Program and Low Carbon Fuel Standard — add as much as $0.54 per gallon [10]. And California mandates a specialized gasoline blend designed to reduce air pollution, a cleaner-burning formulation that requires additional refining steps and expensive blending components [10].

But the most acute vulnerability is structural. California's gasoline supply chain is effectively an island. The state's refineries produce a unique fuel blend that other domestic refineries rarely manufacture, meaning California cannot easily tap into the national fuel supply during shortages [11]. And that supply chain is actively shrinking.

Source: EIA / U.S. Energy Information Administration

Data as of Mar 2, 2026CSV

The Refinery Crisis Within the Crisis

Phillips 66's Los Angeles refinery processed its final barrel of traditional fuel in October 2025 [12]. Valero's Benicia refinery — the next domino — is scheduled to close in April 2026 [12]. Together, these closures will eliminate 17% of California's oil refining capacity over a 12-month period [12].

The U.S. Energy Information Administration warned in a February analysis that these shutdowns present "risk for higher gasoline prices on the West Coast," noting that West Coast refineries have historically maintained lower inventory levels than the national average [11]. The resulting supply shortfall could range from 6.6 million to 13.1 million gallons per day — a deficit that must be filled by imports from the U.S. Gulf Coast or Asian markets [12].

Under normal conditions, that supply adjustment would have been manageable, if costly. But the Strait of Hormuz crisis has thrown a wrench into global shipping logistics. Leading maritime insurers have dropped war risk cover for vessels operating in the Persian Gulf [5], and supertanker rates have soared as the shipping industry scrambles to reroute around the conflict zone [5]. For California, which was already set to become more dependent on imported fuel, the timing could not be worse.

"California regulated itself into an energy crisis before the war even started," wrote CalMatters in a September 2025 editorial that now reads as prescient [13]. A joint analysis by USC and UC Berkeley projects that refinery closures alone could push gas prices up $1.21 per gallon by August 2026 even without the Iran conflict [12]. Other forecasts are far grimmer: one analysis found California gasoline could reach $8.44 per gallon by year's end if current conditions persist [14].

Beyond California: The Southwest Under Pressure

California's pain is radiating outward. Arizona, Nevada, Oregon, and Washington all depend to varying degrees on California's refining infrastructure [15]. As California-blend gasoline becomes scarcer and more expensive, these states face supply adjustments and price premiums of their own.

The national picture, while less extreme, is still alarming. The AAA national average of $3.48 per gallon as of March 9 represents a sharp break from the sub-$3 prices Americans had enjoyed through most of early 2026 [8]. The cheapest states — Oklahoma at $2.79, Mississippi at $2.81, Kansas at $2.83 — are still seeing upward pressure [16]. Hawaii ($4.40) and Washington ($4.38) trail California as the nation's most expensive gasoline markets [16].

The global reverberations extend far beyond the pump. Iraq's southern oilfield production has collapsed 70%, falling from 4.3 million barrels per day to 1.3 million, effectively crippling OPEC's second-largest producer [6]. Kuwait has been forced to cut oil production as the Strait of Hormuz closure disrupts its export capabilities [5]. European natural gas prices nearly doubled after Iranian drones attacked Qatari gas facilities on March 2 [3].

The $100 Barrel and What Comes Next

Energy analysts are sounding increasingly urgent alarms. If the Strait of Hormuz remains closed for two months, Brent crude prices could rise above $110 per barrel [7]. A four-month disruption could push prices to $135 [7]. Some analysts warn oil could hit $150 per barrel by the end of March alone if shipping through the strait does not resume [17].

For California consumers, an ABC7 expert has already projected $8 per gallon by year's end if the war drags on [18]. The state's unique vulnerabilities — high taxes, specialized fuel blends, shrinking refinery capacity, and geographic isolation from alternative supply sources — mean every dollar increase in crude oil translates into outsized pain at the pump.

Source: AAA Gas Prices

Data as of Mar 9, 2026CSV

President Trump has floated the idea of the United States "taking over" the Strait of Hormuz, a statement that briefly caused oil prices to pull back from near-$120 before markets determined the logistics of such an operation remain deeply uncertain [7]. The administration faces a fundamental tension: the war it launched is directly driving the energy crisis hammering American consumers.

The Economic Fallout

The broader economic consequences are mounting rapidly. Stock markets have plunged — Dow futures sank 1,000 points in a single session as oil topped $110 [19]. Global shipping routes are being rerouted. Aviation and tourism industries face widespread disruptions [3]. Analysts project potential increases in global inflation and warn of recession risks if the disruptions persist [3].

For the roughly 39 million Californians navigating the most expensive gasoline market in the nation, the calculations are brutally simple. A driver with a 15-gallon tank who fills up once a week is spending roughly $27 more per month than they were before the war began — and $130 more per month than a driver in Oklahoma buying the same amount of fuel. For lower-income households, gig workers, and long-distance commuters in a state where car dependency is deeply embedded, these numbers translate directly into foregone groceries, skipped medical appointments, and impossible choices.

The war in Iran may have ignited the crisis, but California's gasoline market was a tinderbox waiting for a match. Decades of policy decisions — from the nation's most stringent environmental regulations to a failure to diversify fuel supply chains as refineries shut down — have left the state uniquely exposed. Whether the conflict ends in days or drags on for months, the structural vulnerabilities it has exposed will persist long after the last barrel of crisis-priced oil flows through whatever remains of the global supply chain.

The Road Ahead

The convergence of geopolitical conflict and domestic energy policy has created a crisis with no quick resolution. Even if hostilities cease immediately, damaged infrastructure, disrupted supply lines, and elevated shipping risks mean fuel prices could take weeks or months to normalize [20]. For California, the refinery closures are permanent — Phillips 66 and Valero are not coming back.

Energy economists are divided on the path forward. Some argue California must urgently secure alternative supply arrangements — pipeline expansions, new import terminal capacity, strategic fuel reserves — before the Valero Benicia closure in April compounds the shortage. Others contend the crisis underscores the need to accelerate the transition to electric vehicles and renewable energy, arguing that dependence on a volatile global oil market is itself the structural flaw.

What is not in dispute: California's drivers are paying the highest gasoline prices in the nation during what may become the worst oil supply disruption in history, and the forces driving prices higher — war, shipping disruption, refinery closures, regulatory costs — are all moving in the same direction.