California Turns to Bahamas to Bypass Costly Shipping Law for Fuel Imports

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California is increasingly importing gasoline through the Bahamas to bypass a 106-year-old US shipping law that requires domestic fuel shipments to use costly American vessels. More than 40% of the gasoline California imported in November was routed through the Caribbean hub, a record high, as drivers in the state pay an average of $4.58 per gallon, the most in the country.

Why it matters

The indirect route through the Bahamas adds time, complexity and exposure to volatile global freight rates, ultimately putting upward pressure on pump prices in California. This workaround highlights the state's shrinking refinery capacity and reliance on imported fuel, which has been exacerbated by recent refinery closures.

The details

Gasoline refined along the US Gulf Coast is first shipped roughly 1,100 to 1,300 nautical miles to Freeport in the Bahamas, where it is stored at large transshipment hubs before being re-exported. From there, tankers travel another 4,000 to 4,500 nautical miles through the Panama Canal and up the West Coast to Los Angeles or San Francisco. The added leg builds extra shipping, storage and handling costs into wholesale gasoline prices. While routing fuel through the Bahamas can still be cheaper than chartering scarce US-flagged tankers, the detour adds time and complexity.

• In November 2026, more than 40% of California's gasoline imports were routed through the Bahamas.
• The Phillips 66 refinery in Los Angeles was shuttered in October 2026.

What’s next

Valero Energy Corp. is preparing to close a refinery in Northern California this coming spring, which could further increase California's reliance on imported fuel and put additional upward pressure on gas prices.