Gasoline inventories in California have dropped to a historic low as conflict in the Middle East drives up fuel prices across the United States. Analysts warn that the full impact of supply disruptions linked to the closure of the Strait of Hormuz has not yet reached California.

According to data from the American Automobile Association (AAA), the average retail price for a gallon of gasoline in California reached $5.86 as of Thursday, the highest in the nation and significantly above the national average of $4.09.

Analysts indicate that supply constraints are expected to worsen, with California likely to be among the first U.S. regions affected by supply shocks resulting from the Strait of Hormuz closure, due to the state's reliance on refined fuel imports from Asia.

Nikki Woodard, a spokesperson for the California Energy Commission, stated, "With the Strait of Hormuz effectively closed, causing supply tightness, the Energy Commission is maintaining close communication with all in-state refineries to ensure adequate transportation fuel supplies during this volatile period of constrained supply."

Over the four weeks ending April 10, California's average gasoline inventory stood at 9.44 million barrels, the lowest level recorded by the California Energy Commission since record-keeping began in 2005. These inventories include California-blend gasoline, blending components, and non-California gasoline stocks.

Because California is isolated from fuel pipelines serving other parts of the country and relies heavily on imports from Asia, it is particularly vulnerable to price shocks. Asian refiners import crude oil from the Middle East and process it into gasoline and other products for shipment to the U.S. West Coast.

AAA data shows that the statewide average gasoline price in California is $5.86 per gallon, having increased by 26% since the outbreak of conflict involving Iran. California's higher gasoline prices are attributed to taxes and the additional costs associated with producing its unique gasoline blend, which was developed to reduce smog that once blanketed Los Angeles.

In an analysis released this week, Michael Mische, a professor at the University of Southern California, noted that the full effect of reduced gasoline and crude oil imports has not yet been felt in California's fuel system. Shipping refined products from Asia to the West Coast typically takes several weeks.

Analysis indicates that gasoline imports are projected to decline significantly over the next one to two weeks. The report stated, "This will mark the point at which the import shock fully materializes in terminal supplies and, ultimately, in prices at the pump."

Susan Bell of energy consultancy Rystad Energy suggested that the decline in California's gasoline inventories could worsen in the coming weeks.

Once a major oil-producing state, California has grown increasingly dependent on crude and fuel imports in recent years following the shutdown of two refineries, which accounted for approximately 20% of the state's refining capacity. According to the California Energy Commission, the state's crude oil inventory stands at 10.09 million barrels, down more than 23% from a year ago.

Woodard mentioned that California refineries are sourcing imported crude and gasoline from alternative suppliers to offset the reduction in Middle Eastern shipments. She added, "We do not anticipate supply challenges in the short term."

Currently, the agency expects inventories to be sufficient through mid-May. California residents consume approximately 36 million gallons of gasoline per day.