California Gas Prices Spike as Fuel Routes Through Bahamas

California is truly at a breaking point. >> Valero’s got gas stations all across the country, but it’s this refinery that is particularly important to California. >> Refineries are closing. Supply is diminishing. >> Environmentalists are cheering the shutdown because of the decline of pollution. But the question is, where is California going to get its gas? >> My constituents are paying more at the pump every single day. And it it isn’t theoretical. This is happening right now. And the longer we wait to address this issue, the more instability and volatility we’ll see here in California.

>> They say decades of state policies targeting oil and gas have created a cost and supply crisis with serious consequences. And it’s going to get worse without swift action. While the national average for gas right now is well below $3, in California it’s $452, up uh 14 cents in the last week and up 30 cents in the last month. They say it’s going to get worse as we watch gas prices in California absolutely ramp up and go to the moon. Are they going to 12 bucks a gallon? We don’t really know. I mean, if you have a you have a refinery fire of the one of six or seven refineries that are left, yeah, you could get there like that.

What we’re seeing right now is that steady increase from winter to springtime and with and then eventually summer with the advent of the closure of two more refineries in California, we’re going to see we’re going to see some just crazy numbers. Everybody knows it because when you reduce that supply, prices have one way to go and it’s not down, right? So before we get to our main title, California gas prices surged 40 cents in just two weeks as impact of refinery closures weigh. You guys have been sending me photos. You’ve been sending me photos over five bucks a gallon in California, various different cities.

Isn’t it weird how in some cities it’s just so cheap and then in others it has to do with your location availability routes to the refineries, routes to the the uh you know the the oil lines. It’s complex, right? It’s complex. So 40 cents in just two weeks and this was boom right after the Benicia the Valero uh refinery closed because they basically closed end of January and we are seeing those prices spike whether that’s seasonal or what we’ve got going on. Either which way desperate California is importing oil from the Bahamas using century old loophole estate faces highest US gas prices. California is increasingly importing gasoline through the Bahamas.

A workaround to a 106-y old shipping law that forces domestic fuel shipments onto costly American vessels. Oh, this is some intrigue here. Got some intrigue. More than 40% of the gasoline California imported in November was routed through the Caribbean hub. A record high, which comes as drivers in the state are paying an average of 458 per gallon. That’s a that feels like about what I am paying here in Washington in in Belleview. The most in the country according to Bloomberg News gasoline refined along the US Gulf Coast primarily in Texas and Louisiana is first shipped roughly,00 to,300 m nautical miles to Freeport in the Bahamas.

The other way it’s going the other way. It’s going further east. South and east. Yeah, let’s send it out to the Bahamas. This makes sense. Where it’s stored at large trans shshipment hubs before being reexported. So, Louisiana and um and Texas and then put it on a ship, ship it to the [laughter] Bahamas, put it on one of 50 or whatever it is, these Jones certified oil tankers, of which there’s only only like 50some in in the world. And yet there’s 7,000 just, you know, everyday oil tankers. But because of this law, hey, let’s ship it to the Bahamas. It’s cheaper. And it is it’s a workaround, right?

Total workaround. From there, tranker tankers travel another four to 4,000 to 4500 nautical miles through the Panama Canal and up the West Coast to LA or San Francisco. Now, tell me tell me in any way, shape, or form how this makes any sense from an an environmental standpoint. You’re going from Texas to the Bahamas down through the Panama Canal and then up the West Coast when you could be avoiding all that by just drilling and allowing the refineries to do their thing in California. Instead, we do this random fab about to the Bahamas. The Bahamas. It makes no sense whatsoever. It’s It’s absolutely astounding, right?

In total, the voyage spans roughly 5,000 to 6,000 nautical miles. And and and and meanwhile, they’re just billowing smoke into the environment, billowing smoke into the environment, right? So, you’re okay with five or 6 thousand nautical miles of billowing smoke into the environment, but you’re not okay with a little bit of regulated smoke going in. I mean, you have been and then and then you’re just not, you know, Benicia is a good example of that. Well, we don’t want to lose the jobs and Valero just says, “No, you’re done. We’re tired of your California nonsense. We’re done. We’re we’re taking a billion dollars and we’re we’re charging this bad boy off.” And that’s literally what they’ve done.

All right. Here’s here’s a good I mean, here here is [laughter] how that goes. So, it is south, but it’s a mainly it’s mainly just due east, right? Here’s a typical a typical vessel uh itinerary, right? All right. So December 15th, they go ahead and load up in the Bahamas and they they they go out to sea and then they go through that Panama Canal and then they do the whatever 4,000 miles up the coast to California when in fact you could be refinering oil right here the whole time. Instead, we do this absolute monkey about and then so two weeks later the ship arrives at the destination in LA and somehow somehow this is is is better for the environment than that than than doing what we do in in California.

[groaning] It makes no sense, does it? It’s not really meant to, though. It’s what what it what California is doing is just virtue signaling. Oh, look at how clean we are. We hate refineries now. And we’re finding out what happens when you’ve got two less refineries. At typical tanker speeds of 12 to 15 knots, that’s actually moving along. You know what I mean? For a big rig, just journey can take two to three weeks. The added lag builds extra shipping, storage, handling costs into wholesale gallon prices, which are ultimately passed on to the consumer. Oh, I feel so good about that. I feel so green about this old deal.

While routing fuel through the Bahamas can still be cheaper than chartering scarce US flag tankers, the detour adds time, complexity, and exposure to volatile global freight rates. I mean, and and and the whole time you could be refining oil at home. California has either the fourth or the fifth largest oil reserves in the United States. But, you know, polit politicians Gavin Newsome has been so hellbent on eliminating big oil from, you know, our lives that this is what we’re resorting to, the Bahamas. All of which can put upward pressure on pump prices in California. Mind you, this is gasoline already coming from the United States.

It’s nuts. It’s absolute It’s It’s absolute nuts. This is this is policy out of California, you know, and it impacts so much more than just California. It impacts Nevada. It impacts Arizona. I mean, some of the numbers there are crazy. I think 88% of gas products for Nevada come from California. Oh, how’s that going to go? Not well. Not well. The [snorts] indirect route is used by suppliers to sidestep the Jones Act. 1920 law requires goods transported between US ports to travel on US-built and US crude ships. Crude as in crew of guys and gals. Let’s not be sexist. There are only about 55 Jones Act compliant tankers worldwide compared with thousands of foreign flagged vessels, making direct Gulf Coast shipments to California prohibitively expensive.

Chartering a foreign flagged tanker has historically been significantly cheaper than using a Jones Act compliant vessel. H it’s just it’s it’s a complete workaround, right? And you shouldn’t have to do it. That’s the bottom line. Shouldn’t have to do it because California has the ability to create their own, you know, refine their own. California has had to increase its reliance on fuel ship from the Atlantic due to the closure of the Philips 66 refinery in LA this past October. So we had the Philips 66 and most recently we had the Benicia just basically go cold. That’s the uh Valero. Um it just went down and it went down early, right?

It went down early. Golden State has seen a wave of refinery closures in recent years due to rising costs. Yep. more strict environmental rules. After Philip 66 was shuttered, gas imports to California climbed to the highest level since 2016. It’s it’s it’s sheer insanity what is going on in California. I mean, it’s going to have so much impact. How about this one? Just straight up, gas prices are rising in California. They’ve increased 40 cents in the past month. 458. I I bet you by the time this this video comes out, gas is like 4 465 470. I mean, that’s that’s how quick this is going. They’ll hit five and then they’re on they’re on the runaway freight freight train to six gallons, right?

So, here’s one of the bottom lines. As of March 2025, about a year ago, according to the US Energy Information Administration, Californians spend the equivalent of 90 cents per gallon between local, state, and federal taxes, the highest taxes at the pump in the entire country. And they’re about to get possibly outrageously expensive because because of the whole shutdown of the refineries and inability to basically inability to manage their oil flow. [clears throat] They’ve just they’ve cut it off, cut it off, cut it off, cut it off to the point where nobody wants to do business in California.

And this is the end result. This summer to me, I think is when you start to see some real real cracks in what happens when you’ve got a thinly supplied commodity like gasoline, like oil, and then you have something like a refinery fire or something happens at the at the docks where the oil shipping container ships come in. You got something there, something wacky happens there. This kind of stuff happens all the time. All the time. And then that’s when you see the absolute boop right to the moon spike because all of a sudden you’ve got no ability to bring more in and you’ve got no ability to domestically produce what you should be able to.

But you can’t because of politicians decisions that oh we’re going to be so green. This is going to be the best thing ever. We’re so much better than those oil states. I mean, look at where they’re getting oil from right now. I mean, Texas and and Louisiana and and then we’re doing this monkey about with the shipping because it’s cheaper. The whole thing is just absolutely whacked. But you know what? People are so busy. People are so busy just trying to pay their bills and run their lives that they kind of go, “H, you know, not much I can do about that. I need gas.” Well, yeah, there are politicians out there trying to wave the flag and go, “Hey, doesn’t have to be this way.” But there’s only a handful of those.

Literally, there’s a handful in California that are doing that. and they’re they’re the ones that are going to get the exposure when things do hit the fan. And it’s it’s just a it’s a matter of time and it’s a numbers game. The more time that goes on, the more exposure California has with this really really thinly supplied um refinery scenario. And you’ve literally got two more that have closed down. And you know, things were things were precarious then. And we’re coming out of winter, which is historically the cheapest the gas gets. So this spring, who knows? Who knows? Will we see that $843 that uh one of our experts predicted?

We could. We could. And I’ll podcast it right here for you on News for Reasonable People. Thanks again for being here. Love to have you subscribe, hit that like button, do all that good stuff, share with friends and family. I’ll see you on the next episode. Thanks again for being here. Bye for now. [music] [music]