Allowing foreign-flagged tankers to move transportation fuel from the U.S. Gulf Coast to West Coast Ports is only a band aid for California’s humongous demands for transportation fuels.
Ronald Stein, P.E. is an engineer, columnist on energy literacy at America Out Loud NEWS, and advisor on energy literacy for the Heartland Institute and CFACT, and co-author of the Pulitzer Prize-nominated book “Clean Energy Exploitations”. He has been featured in the CIO Look Magazine as one of The Most Influential energy leaders shaping the future of the energy sector.
Mike Ariza is a US Navy veteran with over twenty years of experience in the refining industry. His refining experience extends from the Chevron Refinery in Richmond California, the Flying J refinery in Bakersfield, and the Valero Refinery in Benicia. Mike held the positions of number one control board Operator at Flying J and Senior Refinery Control Board Supervisor at Valero. He was an instructor of both operator field and control board classes. Among his peers he is often referred to as one of the top ten control board operators in the country.
Co-authored by Ronald Stein, and Mike Ariza
Published August 24, 2026, at America Out Loud NEWS
https://www.americaoutloud.news/california-is-running-out-of-refineries-and-running-out-of-time
With no pipelines crossing the Sierra Nevada, California is an energy island, separated from the crude oil supplies and refinery infrastructure of the other continental states. As a result, the state’s transportation fuel needs—for airports, cars, trucks, and ships serving three of America’s busiest ports—must be met by in-state refineries.
With the recent closures of the Valero and Phillips refineries that processed crude oil and the 2023 conversions of Marathon in Martinez and Phillips 66 in Rodeo that are no longer running crude oil, just renewable diesel, California’s remaining six refineries that process crude oil do not have the capacity to produce all that California demands of 58 million gallons of transportation fuel DAILY:
- 11 million gallons/day for Jet fuel for the States’ 16 primary major military air bases and installations, and 9 international airports.
- 10 million gallons/day for Diesel for the States’ trucking and construction industries.
- 37 million gallons/day for Gasoline for the States’ more than 36 million vehicles.
In addition, approximately 5.2 million metric tons of bunker fuel are an annual demand for the ships in three of the busiest Ports in America, located in California.
- Port of Los Angeles had more than 1,800 vessel arrivals in 2024, which includes cruise and merchant ships.
- Port of Long Beach handled over 9.6 million container units in 2024, indicating a very high volume of ship activity, plus cruise ships.
- Port of Oakland, which also handles significant cargo volumes, contributes to the total number of cruise and merchant ships needing fuel.
California policies have reduced the state to six operational crude-oil refineries, forcing it to import 14 to 15 million of the 37 million gallons of gasoline it consumes each day, primarily from Asian countries.
Because of the reduction in transportation fuels being imported to California from Asian refineries, President Trump made the call to waive the Jones Act. This allowed foreign flagged tankers to take fuel receipts from states in the Gulf of America along with the East coast and deliver them via the Panama Canal, to California ports. Normal rules require domestic shipping vessels to be American built, owned, and crewed.
- A Jones Act waiver is a temporary legal exemption that allows foreign-flagged ships to carry cargo between U.S. ports, i.e., from the Gulf Coast through the Panama Canal, to the West Coast ports in California. Under the Jones Act waiver in the last 3 ½ months foreign flagged tankers have transported more gasoline to California than what has been shipped to the state in the last 15 years combined.
- The Petroleum Administration for Defense Districts PADD 5 (West Coast) jet fuel inventories normally track between 9 – 11 million barrels on hand. By April 2026 inventories were at 2.6 million and dropping. This was the lowest inventory for that time in more than 23 Years. Then on April 2, 2026, South Korea, California’s largest supplier of jet fuel, announced that they were suspending jet fuel exports. With this announcement and the fact that PADD 5 inventories were getting near historic lows, Southwest Airlines took unprecedented historic action. Southwest chartered a tanker flagged under the Marshall Islands to transport 306,389 barrels of jet fuel from the Valero Pasadena dock in Houston to berths in Los Angeles and Long Beach. In addition to Southwest Airlines’ unprecedented action, in the last 3 ½ months foreign flagged tankers have transported more jet fuel from PADD 1 and PADD 3 to California than the state has received in the last 36 YEARS COMBINED.
- On August 10, 2026, President Donald Trump approved a 90-day extension of the Jones Act waiver that will allow foreign-flagged vessels to transport critical transportation fuels demanded in California and agricultural commodities between U.S. ports in the Gulf Coast and West Coast from August 17 through mid-November 2026.
California is the 4th largest economy because it has always had sufficient refinery capacity to manufacture the humongous in-state demands for transportation fuels. It is important to note that long term federal waivers will not solve the supply chain of transportation fuels demanded by the 4th largest economy in the world.
The root cause of refineries hemorrhaging out of the state is California state policies. National policy “band aids” cannot provide the long-term solution to a California sponsored hemorrhaging of the in-state refineries needed to manufacture the transportation fuel demands within the state.
With those recent refinery closures of the Phillips in Wilmington and Valero in Benicia and previous conversions of Marathon in Martinez and Phillips 66 in Rodeo that are no longer processing crude oil, just renewable diesel, California must now rely on the importation of transportation fuels that cannot be made in the State, 40% for gasoline demand and 35% for jet fuel and diesel demand.
- With the onset of the Iranian war, crude oil supplies being shipped through the strait of Hormuz were cut off to the Asian countries that were supplying California with transportation fuel. This forced the Asian Refineries to reduce their crude oil charge rates. As the crude oil charge rates declined their production rates of the vital fuels for California also declined to the point where they were forced to suspend their shipments to our state. By the first week of April 2026 nearly all outbound fuel shipments were cut off. With transit times across the Pacific Ocean running between 35 – 45 days this set California on a course for a supply shock starting in the last week of May 2026 with subsequent transportation fuel shortages at the terminal and fuel station levels starting in mid to late June 2026.
- To help California, Gulf refineries bumped up their production rates from a normal of 95-96% to near 98% of capacity. Some refineries also deferred their scheduled 1st and 2nd quarter maintenance shutdowns known as turnarounds to keep production online. Despite the slight increase in refinery rates most of the fuel that has been supplied to California has come from Petroleum Administration Defense District 1 (PADD 1) from the Gulf Coast and PADD 3 from the East Coast. In essence, California policies have caused the state to tap into other national military reserves. Refineries deferring their scheduled turnarounds is hazardous. Turnarounds are scheduled for a reason. Every day of delay further increases the possibility of extended downtimes due to equipment fouling or uncontrolled shutdowns due to equipment failure.
California State policies and economics have caused most of the in-state refineries to close over the last few decades and cease doing any manufacturing in the State which directly relates to transportation fuel shortages. The remaining seven refineries do not have the capacity to manufacture the supply chain demands for 58 million gallons a day of transportation fuels, and the bunker fuel demands of ships at 3 of the busiest ports in America located in California.
California is continuously increasing its reliance on costly foreign fuel imports from major polluting foreign refineries that ship those fuels long distances for 30 to 45 days across the Pacific Ocean by polluting tankers before reaching California ports. Because California’s unique environmental regulations require highly specialized fuel blends, and the domestic tanker fleet is too thin to fulfill its immense volume requirements, the state will be forced to look abroad. Refiners and marketers like those in the California Fuels & Convenience Alliance will likely pivot to importing replacement components from international markets, leaving California more exposed to global supply shocks and high replacement costs. However, given the current global supply strains, it is unlikely that they will find replacement transportation fuel sources. This will most likely lead to supply shocks within the state and the strong possibility of shortages of the daily transportation fuels that are demanded within the State.
Governor Newsom has received three letters from Chevron, Marathon, and PBF, owners of six of the remaining seven refineries in the state. All three letters state that if California refuses to negotiate with them on the newly proposed Cap and Invest amendments that were drafted by the California Air Resources Board (CARB), then they will seriously consider shuttering their operations and leaving the state like Valero did.
California’s Governor, Legislatures, Senators and Representatives must immediately implement plans to support the retention of the 7 remaining refineries. If these refiners shut down, then no amount of waiver tankers will be able to prevent current shortages from becoming humongous catastrophic shortages. These shortages will be of historical proportions. They will affect Nevada, Arizona, and if the ports are shut down, they will reach well into the center of the nation.
California is not proactively supporting the reanimating of the closed Valero Refinery in Benicia or the closed Phillips Refinery in Wilmington. In addition, California government is not making the necessary policy changes to avert the hemorrhaging loss of one or more of the remaining California Refineries.
We strongly encourage the President to immediately invoke the Defense Production Act (DPA) of 1950 which is a United States federal law that gives the President emergency powers to control domestic industries and private businesses. It ensures the nation has enough industrial resources and supplies for national defense, energy infrastructure, and major emergencies.
Please share this information with teachers, students, and friends to encourage Energy Literacy conversations at the family dinner table.
You can’t seriously expect a Democratic Party Californian politician to look to the future and do the right thing for the state. After all, they have spent their entire political careers doing the wrong thing.
Reality has a way of interrupting political shenanigans. Problem is, can’t tell how. There are two and a half serious crises getting ready to bump into reality, and no politician wants to be caught trying to fix any of them: California’s net zero lunacy, the $40 trillion national debt and its increasing interest payments, and Social Security. Only the last has a date, 2032, but the others will probably come due before then.
How about California’s water problems?
Stop growing thirsty crops, or more precisely, stop subsidizing thirsty crops with cheap water.
Crawl back into your cell and eat your bugs like a good little apparatchik.
Biodiesel?
California uses a special blend of gasoline. I presume that the refineries in Asia, the Gulf Coast and the eastern US from which California is importing the fuels have figured out how to make the special blend.
I wouldn’t bet on it as Oz gets most of its fuel from Asian refineries now-
Fuel standards relaxed to add 100 million litres of fuel to Australian supply – ABC News
and we’re lagging well behind Euro standard already
There is always a Wolf at the door, California moved out of the third pig’s brick house into the second pig’s stick house and is now moving into the first pig’s straw house.
With each move, there were loss of family, some to Texas, some to Florida, some to other States and Countries. The Wolf is the California Government.
California can no longer build more renewable energy because they are short of fossil fuel in every catagory.
Don’t worry California, the UK is as daft as you.
We now have only 4 oil refineries, down from 6 a few years ago
And we had 18 in the 1970s.
Australia isn’t in a much better situation !
Two Oil Refineries Stand Between Australia and Total Fuel Dependency – Petrolmate Blog
Is Shellhaven still operational? I did some work there in the 70’s.
Even if the reality of fuel shortage really hit them in the face, would their pride allow them to admit they were wrong in their policies. It looks as is there could be uncomfortable times ahead for California.
They won’t. Just like people won’t admit they were wrong on the whole carbon dioxide emissions thing. Too many reputations to protect let alone the green incomes.
That is also why science is so slow to change, and medicine too.
Thomas Kuhn’s book Structure of Scientific Revolutions explains this.
https://en.wikipedia.org/wiki/The_Structure_of_Scientific_Revolutions
No. I live here and see it every day. California progressives are convinced of their own moral superiority. Their policies are so well intentioned that they could only have failed because of EVIL greed. Any other explanation causes their entire world view to crumble.
Homeless people and illegal aliens don’t require much gasoline or diesel.
But stopping consumption of fossil fuel is California’s goal. Doesn’t net-zero mean zero? Where is the problem?
Net Zero could mean Many things:
Net Zero could mean the size of your pay check.
Net Zero could mean your water supply.
Net Zero could mean future energy supply.
Net Zero could mean available health services.
Net Zero could mean loss of your food supply.
Who’s on First!
What’s on second.
Net Zero could mean no people at all (or just the few with mansions on the beach).
California has the largest reserves of heavy oil in the United States – according to some reports we are second only to Venezuela worldwide – and heavy oil is absolutely necessary to the petrochemical industry.
No new drilling permits, decreasing outputs and so closing refineries.
California is committing suicide. Is there something in the water making them all mad?
No real elections?
The voters in California seem determined to turn their state into a third world banana republic. I don’t know why they would want to do that. Could it be called Banana Envy? If the economy and the resources of California weren’t so important to the national and the global economy I would suggest we let them trash the place and then let them see how they like living in a third world banana republic. Unfortunately, they are too big and too important to let that happen.
Seems they took the satire Cannibal Women in the Avocado Jungle of Death as a truth filled manual.
Californians are the ultimate NIMBYs
[“California is continuously increasing its reliance on costly foreign fuel imports from major polluting foreign refineries“]
Rich & stupid Californians voted for this so they could feel all warm & fuzzy for ‘saving the planet‘; they will soon become poor & stupid ( you can’t fix stupid !! ) & the planet doesn’t care.
China, North Korea, and Russia all extend their warmest thanks to California, and would like to offer them honorary status as members of their countries. Good job, California. You must be so proud.
Don’t think for one minute that this problem was due to ignorance. Given the chance they will do this in every state and to every US company. Their masters will settle for nothing less than the total destruction of the West.
Our problems run very deep. Do you think that Cloward and Piven were looked down upon by Columbia University or revered? They are heros in academic circles.
California is run by Eco-Nazi idiots. You expect any intelligent policy from them?!
The Dead Kennedys already made a song about that problem in 1979 –
California uber Alles.
Even the Punks knew from the beginning where this was heading ;
but not todays experts.
It started over a half century ago. CA built many state and local/city universities/colleges and the entrance fees are minimal …. none if you’re protected. You have to look very hard at the faculties to find a conservative professor or one that isn’t a fellow traveler. Marxist ideology is rampant. The Marxists played the long game very well. It’s all in the plan. The lights won’t go out because they are building their utopia from within, and without with illegal aliens. They keep the wealthy around to provide the tax money to run their scam. But they are leaving in droves. It will soon be a third world state.
Note report state the first Socialist Professor in the US was at a California University.
It has been an exponential growth function affecting every where in the past 2/3 century.
Hello?
Contrast these (2) statements; each is manifestly true, yet in context are mutually contradictory:
— versus —
Yes indeed, the DPA is a ‘national’ (i.e. Federal) policy that could be implemented to provide an immediate* & enduring** solution to (local) Coastal California’s malfeasance.
Remember, the first two laws of politics & policy are:
All politics is local, e.g. it’s you (your family) against the Zoning Board (or Commission, the HOA), the public School Board, et al. [D. Mamet’s ‘The Secret Knowledge’ elaborates this timeless wisdom.]* **All policy as implemented is temporary, emergency driven … that becomes ossified into semi-permanence. they like to say, ‘In politics, a week is like an eternity.’So why haven’t the Feds (DJT’s Administration) already fixed this mess? The briefest answer is that these things take time, and usually take a crisis (emergency) to resolve. [As Wm. Shakespeare never said — ‘first, let’s kill all the lawyers’.] Or this: the table is set, the dinner-buffet is served, but no-one has yet commanded ‘Bon Appetit’ (‘Dig in’)!
Have we reached Peak Refinery-Failure? The answer depends on the pain-tolerance of your particular industry (including gov’t – military). Today’s fuel-futures show Crude Oil at $80 per bbl [WTI benchmark], equivalent to $1.90 per imperial gallon; refined fuel RBOB at $3.20 per gallon [RBOB index], a markup of $1.30 (+68%), versus year-ago refinery markup of about $0.40 from ~ $1.33/gallon (crude) to ~ $1.75/gallon (gasoline, RBOB again). Don’t even ask about diesel or jet-fuel, they’re off the charts.
Short take-home message: there is no oil-price crisis today, there is only a refinery (refined fuels) pricing crisis. Everybody on the ‘inside’ knows this; everyone else can learn it, but (sadly) ‘every / anyone’ does not include the mass-media Panicans.
‘Short take-home message: there is no oil-price crisis today, there is only a refinery (refined fuels) pricing crisis. Everybody on the ‘inside’ knows this; everyone else can learn it, but (sadly) ‘every / anyone’ does not include the mass-media Panicans.’
I’m calling BS if you’re trying to insinuate there’s some nefarious plot afoot to raise prices. As the article correctly states, our domestic refineries are running flat out. Unfortunatlely, the same goes for overseas refineries, too, which is a problem you can hang directly on the propensity of the IRGC and ‘our man’ in Kiev to blow up refineries.
The future’s markets play into this.
There are certainly speculators in any market, but this market seems more dangerous than usual. As for refiners, they are basically price takers. I doubt if they, or their supply organizations, venture much into the exchange-traded futures or OTC markets other than to hedge the timing risk of buying crude cargoes that price out around a loading date and won’t arrive at the refinery for a couple of weeks, or so.
Agreed, but the oil price is set internationally and the futures markets are significant drivers.
“…and ‘our man’ in Kiev to blow up refineries”. You have no shame, sob Frank. The Ukrainians are fighting tooth and nail to save their families from mass murder, mass rape and mass theft. By destroying oil shipment and refineries in Russia they cut off one and only money flow to Putin to continue the war.
DPA is a law, not a policy.
Nuanced differences matter.
Otherwise quite good.
But they are just encouraging all electric transport. The minor little problem is electric supplies are also in shortage/sarc
They lack the hydrocarbons and coal needed to manufacture those toys. /sarc
California imported approximately 25% of it’s electricity, last I looked.
From states with coal powered electricity, no doubt !
Your reading assignment, if you choose:
Pacific DC Intertie (PDCI), also known as Path 65
If the goal of socialists is control of the population then what California is doing will work. Unpleasant but effective control.
I forget who and from which UN organization made the statement, “You will have nothing and you will be happy.”
Klaus Schwab, founder of the WEF. He’s since been cancelled.
Thank you.
Banning the wheel would solve all of these problems. Indigenous peoples got along fine without the wheel before colonisation.
They are doing their best to ban anything on wheels !
But all it will take (DSA platform) is turning over all industry to the workers.
It is a shame the rest of us have to suffer while California continues on its failed experiment.
I note one detail. The difference between workers and wokers is the letter R which typically is assigned to republicans. 😉
The big California refining problem is restricted access to crude oil for refinery feedstock.
California traditionally received large volumes of crude oil from Alaska, but those legacy reserves are mostly depleted. New reserves are ready for development a few miles East of those depleting North Slope reserves, but California leads the opposition to developing those replacement reserves. California has more than enough crude oil for the states 1 million barrel per day demand offshore in State waters. Likewise, nearby federal reserves beyond the 3-mile State controlled zone could easily meet demand. California, to its peril, opposes all three sources.
Here in SoCal I bought my first tankful of $7/gallon gas a couple months ago. Two years from now it will be more expensive regardless of who is president or whatever does or does not happen in the Middle East. Don’t doubt it.
You’re lucky, here in the UK diesel is 11 dollars a gallon and gasoline is 10.
Two things come to mind. The Lord helps him who helps himself and don’t be an enabler. California needs to quit harming itself before anyone should consider helping them. Making exceptions for California to ease it’s energy woes is equivalent to only giving an addict or alcoholic only enough money to eat on thinking they won’t spend the money on drugs or alcohol.
Agreed in point and principle with one noted nuance.
Military bases are Federal, not State.