California’s “Import Competition” Theory Collides with the Cost of Imported Fuel

As California loses refining capacity and becomes increasingly dependent on imported gasoline, state officials are advancing a new argument: more imports could actually benefit consumers by introducing additional suppliers and greater competition into California’s fuel market.

A new analysis from Extracting Fact argues that the economics are not nearly so simple.

At a June Senate committee hearing, Department of Petroleum Market Oversight Director Tai Milder argued that imported gasoline, which now supplements California refinery production, has created additional competition and contributed to lower and more stable prices during 2024 and 2025.

But the article highlights an important counterpoint made at the same hearing by California Energy Commission Vice Chair Siva Gunda: California gasoline prices are influenced by the cost of the marginal barrel, and that marginal supply increasingly comes from imports. When imported fuel is the highest-cost supply necessary to satisfy California demand, its price can influence the broader wholesale market.

That distinction matters.

California is geographically isolated from the major U.S. refining centers and requires its own specialized gasoline formulations. As in-state refining capacity contracts, replacement fuel must increasingly arrive by marine vessel. Imports carry additional transportation and logistical costs, a point the California Energy Commission itself acknowledged in its 2024 Transportation Fuels Assessment, which warned that importing finished fuel tends to be costly because of shipping expenses.

The analysis also points to comments Gunda made during a December 2025 CEC meeting that imports had not reduced wholesale gasoline costs. The article therefore challenges the proposition that replacing California refining capacity with a growing collection of overseas suppliers should itself be viewed as a consumer benefit.

For California policymakers, the larger question extends beyond the number of companies competing to sell imported gasoline. It is whether deliberately increasing the state’s dependence on a more distant supply chain ultimately improves affordability, reliability, and energy security for California consumers.

CIPA has consistently raised the same fundamental issue regarding crude oil production. California policies can restrict domestic production and refining, but they do not simultaneously eliminate Californians’ demand for petroleum. Until demand falls sufficiently, barrels no longer produced or refined here must be replaced from somewhere else.

That means ships, ports, international suppliers, and greater exposure to global commodity markets and transportation disruptions.

Calling that arrangement “competition” does not change the underlying supply equation. California still needs the energy. The consequential policy question is increasingly where it will come from and what Californians will pay to get it.