California regulators attributed the ongoing war in the Middle East for driving the state's fuel prices sharply higher in recent weeks, urging consumers to "shop around" to ease the pain at the pump.
The Division of Petroleum Oversight tied the "significant fuel price increases" to crude oil supply strains stemming from the Strait of Hormuz closure, prompting the largest oil supply disruption in the history of the global market, the California Energy Commission's Division of Petroleum Market Oversight said in an Enforcement Bulletin and a Consumer Advisory letter Thursday.
Product shipping across the region stalled after Iran threatened to attack any vessel attempting to cross the strait, OPIS previously reported.
The DPMO, which oversees fuel market practices in the state, stated that the group is closely monitoring the California market to ensure firms are not "opportunistically" raising prices that are "disproportionate to changes in their own input costs" to prevent any attempts to artificially inflate fuel costs in the state.
"Our team is vigilantly monitoring the retail, wholesale, and spot markets," said DPMO Director Tai Milder. "Any reports of unfair practices or market manipulation will be taken seriously, and we will not hesitate to refer any illegal conduct for further investigation and prosecution."
The Petroleum Watchdog also urged Californians to shop around for less expensive gasoline, highlighting the $1/gal or more difference in unbranded and branded gasoline retailers despite all gasoline sold in the state meeting the "stringent" standards.
"No public studies have shown that gasoline with brand-name additives is any better for vehicles than unbranded California gasoline," the consumer advisory stated.
Associate professor at the University of Southern California's Marshall School of Business, Michael Mische estimated that gasoline prices could top $7/gal as conflict in the Middle East continues to block vessel movement.
"The ship traffic has gone from 138 ships a day on average to about three," Mische said.
"If you stopped imports of oil and stopped imports of gasoline, you (California) have about 16 to 17 days (of in-state supply)," Mische added. AAA data showed California led the nation in highest gasoline prices Friday, standing at $5.657/gal, while the national average at $3.912/gal.
Research released earlier this month by the Western States Petroleum Association showed California collected an estimated $1.16/gal on all gasoline sold in the state during the month of February.
The organization allocated $0.61/gal to the state's excise tax, $0.20/gal to the Low Carbon Fuel Standard, $0.23/gal collected for Cap-and-Trade, another $0.10/gal funding state and local sales tax, and $0.02/gal designated to the state's underground storage tax.
"The issue is not whether prices are going to go down," Mische said. "The issue is by how much are they going to go up."
The Division of Petroleum Market Oversight is an independent agency within the California Energy Commission responsible for oversight, investigations, economic analysis, and policy recommendations regarding the transportation fuels market. The watchdog agency is a key part of the California Gas Price
Gouging and Transparency Law, Senate Bill X1-2, enacted in special session in 2023.
This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.
Reporting by Sydnee Novak, sbeach@opisnet.com; Editing by My Nguyen, mynguyen@opisnet.com
(c) 2026 Oil Price Information Service, LLC. All rights reserved.
(END) Dow Jones Newswires
March 20, 2026 13:00 ET (17:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
