California Gas Prices linked to Brend Crude Price
California's gasoline and diesel prices are closely linked to global crude oil benchmarks, particularly Brent crude, due to the state's reliance on imported oil. The conflict between Israel and Iran could potentially close the Hormuz Strait — 25% of the world’s crude oil must transit there. Any restriction on oil shipments would raise the global price of crude oil, specifically Brent Crude. The planned closures of Valero and Phillips 65 refineries over the next 12 months are already putting pressure on California’s crude supplies, refined gas, and diesel, and ultimately the price at the pump.
Here's a breakdown of the relationship:
⛽ Gasoline Prices and Brent Crude
Primary driver: California gasoline prices are predominantly driven by global crude oil costs, with Brent serving as the key benchmark[1].
Price sensitivity: A $1/barrel change in Brent crude typically translates to a 2.4¢/gallon change in gasoline prices nationwide[1].
Amplified impact in California:
The state's isolation from national pipeline networks forces greater dependence on waterborne Brent-priced imports[3].
This exposes California to a $4–5/barrel premium over U.S. benchmark WTI crude[3].
Current gasoline price: $4.545/gallon (as of June 16, 2025)[7].
⛽ Diesel Prices and Brent Crude
Strong historical correlation: Brent crude historically explained 89% of diesel price fluctuations[5].
Recent structural shift: Since 2021, the relationship has changed, with diesel now exhibiting:
A 63¢/gallon higher base price
A 17.6% steeper sensitivity per dollar of crude price change[5].
Current diesel price: $4.781/gallon (as of June 16, 2025)[6].
📊 Comparative Price Dynamics
| Fuel Type | Brent Sensitivity | Current Price (CA) | Key Influencers |
| Gasoline | 2.4¢/gal per $1/bbl | $4.545/gal | Global Brent prices, refinery outages[4] |
| Diesel | Elevated sensitivity* | $4.781/gal | Refinery/distribution constraints[5] |
⚠️ California-Specific Amplifiers
Regulatory costs: State taxes and environmental programs add $1.30+/gallon versus national averages[2].
Supply fragility: Refinery closures (21% capacity loss by 2026) exacerbate crude price impacts[8].
Boutique fuel requirements: CARB-mandated blends limit supply alternatives during disruptions[2].
💎 Conclusion
While both fuels respond to Brent crude movements, California's gasoline prices follow the 2.4¢/gallon per $1/bbl rule, with additional state premiums [1][4]. Diesel exhibits a more volatile relationship post-2021, with structurally higher costs beyond crude fluctuations[5]. The state's regulatory environment and supply constraints amplify global crude impacts, consistently placing California prices $1.50–$2.00/gallon above U.S. averages[2].
Sources
[1] U.S. gasoline prices move with Brent rather than WTI crude oil - EIA https://www.eia.gov/todayinenergy/detail.php?id=18651
[2] Why California Gas Prices Are the Highest in America https://thedailyeconomy.org/article/why-california-gas-prices-are-the-highest-in-america/
[3] [PDF] Oil & Gas In California https://laedc.org/wpcms/wp-content/uploads/2025/03/LAEDC_Oil-and-Gas-Economic-Impact-Report_FINAL_2025.03.07-2.pdf
[4] What Drives California's Gasoline Prices? https://www.energy.ca.gov/data-reports/energy-insights/what-drives-californias-gasoline-prices
[5] The Relationship of Diesel Fuel Prices to Crude Oil Prices Has ... https://www.iowafarmbureau.com/Article/The-Relationship-of-Diesel-Fuel-Prices-to-Crude-Oil-Prices-Has-Changed
[6] California No. 2 Diesel Retail Prices (I:CN2DRP) - YCharts https://ycharts.com/indicators/california_no_2_diesel_retail_prices
[7] California Retail Gas Price Weekly Trends - YCharts https://ycharts.com/indicators/california_retail_price_of_gasoline
[8] California gas prices could reach $8 by end of 2026, report says https://www.cbsnews.com/sacramento/news/report-california-gas-prices-8-dollars-in-2026/
[9] California All Grades All Formulations Retail Gasoline Prices ... - EIA https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPM0_PTE_SCA_DPG&f=M
[10] California Gas Prices Could Skyrocket 75% ($8.43/gallon) as ... https://sr40.senate.ca.gov/content/california-gas-prices-could-skyrocket-75-843gallon-refineries-close
[11] Why will gas prices rise in California in 2025? - YouTube https://www.youtube.com/watch?v=nkGOf5tJaUE
[12] Gas Prices in California to Rise July 1, But Not by 65 Cents https://www.nbcpalmsprings.com/therogginreport/2025/06/21/gas-prices-in-california-to-rise-july-1-but-not-by-65-cents
[13] Barclays cuts 2025, 2026 Brent crude forecast as OPEC+ ... - Reuters https://www.reuters.com/business/energy/barclays-cuts-2025-2026-brent-crude-forecast-opec-accelerates-output-hikes-2025-05-05/
[14] California Diesel Prices Today: June 13, 2025 https://california-gas-savings.beehiiv.com/p/california-diesel-prices-today-june-13-2025
[15] Crude Oil vs Gasoline Prices | MacroTrends https://www.macrotrends.net/2501/crude-oil-vs-gasoline-prices-chart
[16] Why gas prices in California 'have gone ballistic' - Yahoo Finance https://finance.yahoo.com/news/why-gas-prices-in-california-have-gone-ballistic-160544399.html
[17] Gas Prices Continue to Decline but California Refinery Issues ... https://info.oregon.aaa.com/gas-prices-continue-to-decline-but-california-refinery-issues-impact-west-coast/
[18] EIA: California fuel prices are rising due to supply issues and ... https://energynews.oedigital.com/oil-refineries/2025/05/05/eia-california-fuel-prices-are-rising-due-to-supply-issues-and-compliance-costs
[19] [PDF] California Gasoline Demand Elasticity Estimated Using Refinery ... https://www.banxico.org.mx/publications-and-press/banco-de-mexico-working-papers/%7B217674A4-C97F-BD7F-8A3D-D83B495B2153%7D.pdf
[20] [PDF] Petroleum Watch - California Energy Commission https://www.energy.ca.gov/sites/default/files/2019-05/2016-04_Petroleum_Watch.pdf