Experts Assess Impact Renewed Fighting in Mideast May Have on California Fuel Prices, Could Exceed $6 a Gallon — Edhat

Renewed military strikes across the Middle East in recent days could push gasoline prices over $6 again in California if tensions between the United States and Iran don’t de-escalate soon, experts told Edhat.

As of Tuesday evening, gasoline prices in California are up 75 cents a gallon since the start of the U.S.-Iran conflict, from a pre-war average of $4.56 a gallon to now at $5.31 a gallon, according to the Energy Information Administration. Average prices reached $6.09 a gallon prior to the June 11th ceasefire.

“If the ceasefire fails completely, and military activities return to the levels seen in March, then I would expect prices to rise to $6 a gallon and above across the state,” said Paasha Mahdavi, Director of the Energy Governance and Political Economy Lab at University of California at Santa Barbara (UCSB).

Prices may remain elevated above pre-war averages through the summer until peak demand season is over after Labor Day, Mahdavi told Edhat.

Mahdavi noted that when crude oil prices drop, refined products, such as gasoline, take much longer to adjust given inventories and overall refinery capacity.

Before the start of the conflict with Iran in late February 2026, Brent crude oil was trading around $70 a barrel. After the outbreak of the conflict, prices spiked, reaching nearly $120 a barrel in early March due to the disruption of oil tankers trying to make the crucial passage through the Strait of Hormuz. Prices returned to near their pre-conflict levels, $72 a barrel, after ceasefires were negotiated, but the resumption of fighting over the last several days made prices rise to $81 a barrel as of Tuesday evening and it continues to climb.

Dr. Severin Borenstein, faculty director of UC Berkeley’s Energy Institute at Haas, told Edhat that a prolonged conflict in the Middle East could have a big impact on fuel prices in California but he stressed that the question of how high fuel prices will climb is hard to answer given President Donald Trump’s policies are rapidly changing.

“It’s really hard to know what’s going to happen to crude prices because Trump’s policies are constantly shifting and no one is sure whether we’re going to have a full-fledged war in a week, or we’re going to have a peace agreement, or we’re going to just have a stalemate, and how the Strait of Hormuz is going to be treated,” Borenstein said.

Earlier this week, Trump announced that the U.S. would charge a 20% fee for transit through the Strait of Hormuz but rescinded his decision hours later.

“I am always hesitant to predict what crude oil prices will do, but I’m even more hesitant now,” Borenstein said.

Last month, Trump warned that without the memorandum of understanding with Iran to end the war and reopen the Strait of Hormuz, global oil reserves would have been depleted within roughly four weeks, potentially triggering a global depression.

Borenstein clarified that the world was not four weeks away from depleting its reserves, there’s enough global supply to withstand the current shock in the Middle East for at least a year.

At the start of the U.S.-Iran conflict, there was some 8 billion barrels of oil in inventories around the world, and the war cut off somewhere in the range of 10 to 15 million barrels per day, Borenstein noted.

“In reality, you could do this for at least a year, and a year would maybe deplete half of the world’s inventory,” Borenstein said. “Now, by the time you get to depleting half of the world’s inventory, the price of oil would go way up.”

Borenstein reiterated that although the price of crude oil may trend downward soon, it won’t immediately reflect at the pump.

“We were seeing gasoline prices coming down, but they were not fully adjusted to the low price of crude oil, and that’s why when the price of crude oil went back up, when the hostilities resumed a week or 10 days ago, we didn’t see a big jump in the price of gasoline because it hadn’t actually fully come down yet from the previous drop in crude oil prices,” Borenstein said.

Recent refinery closures in California — like the Phillips 66 Wilmington refinery in late 2025 and the Valero refinery in Benicia in April — have some impact on gasoline prices because of increased susceptibility to outages, Mahdavi said, but he also found that investing in storage capacity and pipelines to transport crude oil to California would help provide relief in absence of refineries.

“Some of this is being alleviated with increased imports to California from Texas via Arizona, with the possibility of a new pipeline,” Mahdavi said.

Phillips 66 and Kinder Morgan have a $5 billion project, known as the Western Gateway Pipeline, which will stretch over 1,300 miles and transport up to 200,000 barrels per day of refined fuels to markets in California, Arizona, and Nevada. The project involves building a new pipeline from Borger, Texas, to Phoenix, Ariz., and reversing the flow of Kinder Morgan’s existing Santa Fe Pacific Pipeline (SFPP) from Colton, California, to Phoenix.

The project is slated to begin construction in 2027 and is expected to be fully operational by mid-2029, it’s a response to a shrinking refining capacity in California, which threatens to cause fuel supply shortfalls and higher pump prices.

Improving California’s pipeline and storage capacity could increase competition in the market that would help bring the state’s gasoline prices down closer to the national average regardless of additional refinery closures, Mahdavi said.

Borenstein also agrees that California needs to build more infrastructure to support more imports, such as storage capacity, port capacity, and pipelines, especially projects that would support California’s access to more fuel that is refined in Texas.

“The state is starting to work on that now,” Borenstein said. “I think we should have been working on it a few years ago, but that is the route we have to take…we can get adequate supplies from elsewhere, and there’s really no evidence that California so far is suffering from the loss of those refineries in terms of prices.”

Prices at the pump could soften if demand goes down or if consumers shop around town for the cheapest gas, which would put pressure on competing retailers to lower their prices, Borenstein said.

Borenstein also believes that the branded stations in California have a lot of pricing power, but every company takes advantage of its pricing power.

“I think increasing competition is one of the factors that we might be able to have control over to bring down prices,” Borenstein said.

The most effective thing the U.S. could do to lower the cost of driving is to reduce the use of gasoline, but the government is doing the opposite, Borenstein said.

“Under Trump, we are undermining the incentives for buying electric vehicles, and we’re undermining the incentives for producing cars that get better gas mileage,” Borenstein said. “We’re on a trip to consume more oil, and as the demand increases, that pushes up the price, and if we could reduce the demand, which there’s a clear pathway to do by encouraging more fuel-efficient cars and encouraging more electric vehicles, that would cause the price of oil to go down.”

If the demand for oil were effectively cut worldwide by 10%, that would have a huge impact on the price of gasoline, according to Borenstein.

The midterm elections in November will be important as in they will put some guardrails on what the president can do to undermine renewables and boost fossil fuels, Borenstein said, but he doesn’t think that even a Democratically-controlled Congress would be able to reinstate the incentives for renewables or completely shift the debate about fossil fuel production.

Michael Mische, an energy economist and associate professor at USC’s Marshall School of Business, told Edhat that California is currently over-reliant on foreign imports — more than 61% of its oil comes from foreign sources, including Iraq and Brazil.

“This over-reliance on foreign oil and gasoline leaves the Golden State highly vulnerable to geopolitical events and less competitive than other states,” Mische said, adding that the conflict in the Middle East amplifies vulnerabilities.

However, fuel supply chains have shown exceptional resilience and adaptability amid the uncertainties surrounding the situation in Iran, Mische noted.

California could very well have faced average retail prices over $7.00 a gallon if the Trump administration didn’t suspend the Jones Act to allow foreign-flagged tankers to transport badly needed crude oil and gasoline to California and release significant amounts of oil from the U.S. Strategic Petroleum Reserve (SPR), Mische said.

Although the U.S. and OPEC+ crude production has increased somewhat, it is not enough to offset the loss of Iranian crude supply in the global market, Mische said.

“The world will be less reliant on crude oil and other fuels passing through the Strait of Hormuz in the years ahead,” Mische said.

Mische expects that both supplies and prices will eventually moderate, but regardless of whatever happens with Iran, gasoline prices in California will continue to rise and remain among the highest in the nation.

Originally published at https://www.edhat.com on July 17, 2026.