NEWS: US
California gasoline hits a new record high of $4.84 per gallon.

Cal­i­for­nia, which is already pay­ing record prices for fuel, is poised to pay even more as the Gold­en State is more exposed to soar­ing oil prices than the rest of the coun­try fol­low­ing the Russ­ian inva­sion of Ukraine.

Diesel prices at the pump hit a record $5.185 a gal­lon Thurs­day, accord­ing to the AAA auto club. Gaso­line in the state also hit a new record of $4.94 a gal­lon while prices in San Fran­cis­co topped $5, AAA said.

Brent crude futures have jumped about 20 per­cent since the war in Ukraine began, sig­nal­ing that retail fuel prices could rise fur­ther. Mean­while, high fuel prices con­tin­ue to dri­ve infla­tion gains that have become a lia­bil­i­ty for the Biden administration.

Although Rus­sia accounts for only a small per­cent­age of Cal­i­for­ni­a’s crude oil sup­ply, com­pa­nies like Marathon Petro­le­um, Chevron Corp. and Valero Ener­gy Corp. will have to find alter­na­tives as most U.S. refin­ers have turned away from Russ­ian oil. That means the state, along with the rest of the West Coast, will like­ly increase its reliance on Alaska’s ANS crude, which climbed to $116 a bar­rel Thurs­day, as Asian refin­ers may also com­pete to replace lost Russ­ian supplies.

Cal­i­for­nia is geo­graph­i­cal­ly iso­lat­ed from most U.S. oil pro­duc­tion east of the Rock­ies. Inland water­borne sup­plies are lim­it­ed by laws that require expen­sive U.S.-flagged ves­sels to be trans­port­ed, often through the Pana­ma Canal. As a result, West Coast refin­ers have been among the largest recip­i­ents of Russ­ian oil in the Unit­ed States for more than a decade.

In addi­tion, Cal­i­for­nia state reg­u­la­tors require clean­er-burn­ing, bou­tique-qual­i­ty gaso­line and diesel that does not blend eas­i­ly and that few out-of-state refin­ers can make. Fuel man­u­fac­tur­ers in the state must also acquire cost­ly cred­its to off­set car­bon-inten­sive fuels such as gaso­line and diesel, in addi­tion to com­ply­ing with fed­er­al bio­fu­el man­dates. All of these ele­ments increase the cost at the pump.

West Coast gaso­line inven­to­ries are at a 13-year sea­son­al low at 34.4 mil­lion bar­rels, accord­ing to Ener­gy Infor­ma­tion Admin­is­tra­tion data. Local fuel pro­duc­tion in Cal­i­for­nia is expect­ed to decline fur­ther as more refiner­ies con­vert to small­er renew­able fuel facilities.

Accord­ing to Marie Mont­gomery of the Auto­mo­bile Club of South­ern Cal­i­for­nia, high prices at the pump may not pre­vent dri­vers from chang­ing their road trip plans dur­ing spring break. “But $5 a gal­lon will be a red flag” for many dri­vers, she said.