California's Coming Energy Crisis || Apr. 20, 2026
The fallout from the closure of the Strait of Hormuz is reaching California, triggering a serious energy crunch.
Despite producing roughly 300,000 barrels/day of oil, California's consumption is nearly 5x that. So, imports are essential. About half of that previously came from the Persian Gulf, which means shortages are imminent. The rest of the U.S. remains in a surplus, but without sufficient pipeline connections to the rest of the country, the West Coast will face higher prices.
Even if things wrap up in the Middle East tomorrow, the damage has already been done. Oil production in the Gulf will take years to recover, leaving much of the world (including California) with prolonged energy disruptions.
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Comments (38)
I paid $5.50 a gallon at Costco in San Diego today. With a major refinery closing last December and another closing in June of this year, we were already looking at $8/gallon gas this summer, even without the Iran conflict, so …
and despite all of that orange man's approval ratings are still over 40%, Americans are too dumb to learn)))) I wonder which will be the next crisis after he gets bored of this one... one that I definitely see is where orange man doesn't leave the white house, but that's for later
That sucks. Californians already paying 40% higher for Gas, water power than the rest of the country.
I'm just hoping that the 18 remaining rational people in the US can recover when this has passed. I live in a hurricane zone, so yeah I'm optimistic. But because I can see that, now I'm doubtful. And I can't get good code from AI yet, so now I'm thinking this is gonna take a while on the other side. Almost enough to make me a "prep-er..."
Install RenewableEnergy to BePrepared !
Thanks, Peter. Will the protracted oil crunch hasten the switch to renewables and a EV future? Is China the ultimate winner of this splendid little war?
Canada, EU and most of the world will win as well. Canada will mine Critical Minerals (47 says he doesn't need anything Canada sells) to make batteries for HV-EVs that we need for the next decade to avoid 47's IranWar oil cuts.
But couldn’t California ship oil through tanker from Alaska from the pipeline there?
... bringing what kind of crude? Does California have the needed refineries?
I posted this to a different thread but can't find it in comment history, so will assume it got lost. As ZoG readers know, California's problem is mainly one of geography, it being an "energy island" with no fuel transport from North American production in the Gulf of Mexico, Texas, Oklahoma, the Dakotas, etc. The one self-inflicted damage California's state government has so far caused the state is forbidding access to suspected large shale oil fields in Kern County. The lack of overland transport has been an infuriating product of domestic politics: Any proposed pipeline gets opposition, and a demand for a piece of the action, from states and counties it would cross. This latter problem seems likely to be addressed by a proposed Western Gateway Pipeline, to be built by Phillips 66 and Kinder Morgan, but it cannot come online before 2029 at the eariiest. The pipeline would be 1300 miles long, and able to move 200 Mb/d of refined products. https://westerngatewaypipeline.com/project-details (I wonder about possibilities to expedite that.)
Maybe California could build a Texas-type refinery to process tanker loads of heavy CanadianTarSands crude more quickly? Currently, much of it goes by pipeline to Texas, but Canada has plans to ship more to East & South Asia by tanker.
Helima Croft at Royal Bank of Canada (RBC) is one of the more respected voice's in the space, a form CIA Economic Analyst and Economist with the State Dept has this to say in her latest note... • Hormuz: We think shippers will remain cautious in the current environment, with the Norwegian Shipowners’ Association CEO already expressing public trepidation about the “existence of mines and practical implementations of coordination with Iran.” • Talks: Iran will likely be looking for a short -term cash injection in the form of the repatriation of billions of dollars in frozen overseas accounts. The issue of uranium enrichment and the status of the stockpile of highly enriched fissile material will undoubtedly be the key points of contention. We still see no scope for Iran fully relinquishing its right to enrich uranium. Therefore, the path to a deal will likely have to run through some type of extended pause. We think it is conceivable that the IRGC may accept a pause compromise given that the main enrichment sites have been badly damaged by US and Israeli air strikes, necessitating a prolonged repair period. Nonetheless, Iran may still try to push for a dilution of its highly enriched stockpiles as opposed to an outright transfer in order to preserve the ability to use it at a later date
(more) • The Israeli government and congressional hawks are likely to oppose any deal that allows Iran to retain enrichment capabilities and stockpile of fissile material —setting up a potential battle on Capitol Hill if the President seeks to vacate the Iran sanctions. As we have previously noted, many of the most punitive US sanctions on Iran are mandated by legislation, limiting the White House’s ability to unilaterally repeal measures. Moreover, under the Iran Nuclear Agreement Review Act of 2015, the President must submit an agreement involving Iran’s nuclear program to Congress within five days of being reached, with a 60 -day review period to vote on the deal during which the White House is prohibited from lifting sanctions. Washington’s Gulf allies will also undoubtedly object to any agreement that enshrines Iranian control over the Strait of Hormuz. Hence, the President’s post referring to the waterway as the “Strait of Iran” may elicit concern and be viewed as an indication of the price Washington is potentially prepared to pay to bring the conflict to a conclusion
Happy for you Peter! Have a great time in Walla Walla! It’s gorgeous!!! (And maybe delicious)
It's not 1/2. It's less than 1/3 of foreign imports, which are 61% of the absolute total: https://www.energy.ca.gov/data-reports/energy-almanac/californias-petroleum-market/foreign-sources-crude-oil-imports I live here. Yes, gas prices are European levels now. Yes it's a crisis. But this is surmountable.
Perhaps an influence on the CA Primaries...?
This makes me wonder about the oil refineries in New Jersey and Delaware? What is their source of crude and what do they produce?
Where’s the other half of imports coming from? If Canada, couldn’t they load a few more empty ships that usually come from the Gulf for the short coastal trip back down to CA?
Your refineries have to be setup to work with the crude you get. Canada's crude is some of the harder stuff to work with. It would take some time to switch to Canadian crude. There doesn't seem to be appetite to open new refineries etc in California.
It will be mitigated by running the Texas pipeline to Tucson at full tilt to supply Phoenix, and truckers will not be buying much diesel in CA. That can take care of Phoenix by suspending AZRBOB stupid boutique gas. Vegas can get some from New Mexico. Of course, high US prices are going to slash demand this summer for the vacation, now staycation crowd. I imagine that the North Slope will be pushing for max current production to take advantage of high prices. This will still be quite the oil shock.
Hungary & Victor Orban...the thumbnail showed up on my feed and then disappeared last week. What happened? Wink in next episode if you've been compromised 🤨
Hi Brian, that video was released as a bonus for our Analyst Tier. https://www.patreon.com/posts/new-era-in-orban-155518043?utm_medium=clipboard_copy&utm_source=copyLink&utm_campaign=postshare_creator&utm_content=join_link
This California mess started decades ago when Governor Moonbeam began pushing back on development of the state’s massive offshore reserves, betting instead that the rest of the world would be pleased to supply all that “dirty” stuff. This is just a sad game of “what goes around comes around” which with the massive fuel taxes the state extracts will lead to $10 gas by year end.
So Gavin Newsom is going to have to explain why his state has $7 a gallon gasoline while everyone else is at $3.59 on the debate stage against JD Vance. That’s going to be entertaining
So you think JD will prevail in Primaries? I think he will make DeSantis Look cool in his white boots.
Hey DJT, amazing job! Give the man a prize for total incompetency...
California did this to themselves with the green energy crap. Brown/Newsome loved them some clean energy on the public face while letting the black side of energy (oil) come from others. Made them look all progressive and shit.
I think as soon as us people feel this pain, someone will put the orange Clown out of his misery
Oops! And twas a Californian engineer who tried on Saturday!
What's the medium to long term impact on the gulf regional economies and subsequent political stability look like? How long can these regimes last without their primary revenue source pulling funds in?
Trump won’t lift a finger to help California! It’s blue, and Newsom is the governor! Vindictive!
Californians VOTE!
Nice threads Peter..!
Way to go, Donny; it's back to doom and gloom again. Donny can suspend the Jones Act for a bit to help out Cali; gotta keep what's left of those oil refineries humming before they go all EV in ten years. I thought people were bailing Cali and immigrating to Texas; they have ten more Refineries for Vroom, Vroom.
Gas has been over $5/gallon here for years. Now it's generally $6 - $7. There are a limited number of refineries, even if we can get the crude.
If Trump has the US leaves the Persian Gulf now? Will Europeans and China make deals the US for long term deals to get oil from the us by increasing production Oil Shale and Fracking securing these long term oil contracts with Europe and China. Since Iran will be able to shut the straight of Hormoz down whenever they want. Will the US increase Liquefied Natural gas to Europe to help their winter energy supplies?
The oil crisis is quickly going to redline critical yet my sense of it is most people think the war will end, the oil will flow, and all will be well. Soon. Yet, for one thing, there is substantial reason to suspect the war will NOT end soon at all. To crush the IRGC will take at least months, if all goes well. Also, as Ziehan notes, oil wells cannot be turned off and on like a water faucet. Anyway, my two cents from a practical personal view is we should be looking at $150 oil for a number of years beginning very soon, and all that it implies. Honestly, I can't get a grip on that at all, except: BAD!
It will take time and boots on the ground to fix this cluster. But hey, Donny's buddies are making bank playing the markets.