California Relies on Bahamas for Fuel as Gas Prices Surge

State's environmental policies force refineries to close, leading to reliance on imported gasoline.

Published on Feb. 18, 2026

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California is increasingly relying on gasoline shipped from the Bahamas as more refineries in the state close due to strict environmental policies, causing gas prices to surge. The state's refining capacity has been steadily declining, forcing it to import over 60% of its gasoline needs from foreign sources, including a significant portion from the Bahamas.

Why it matters

California's heavy reliance on imported fuel highlights the challenges the state faces in balancing its environmental goals with maintaining a reliable and affordable energy supply for its large population. The closure of refineries has led to higher gas prices, which disproportionately impact lower-income residents.

The details

Under the Jones Act, goods shipped between U.S. ports must travel on U.S.-built, owned and operated vessels, which are in short supply. As a workaround, gasoline is shipped from the U.S. Gulf Coast to the Bahamas, then reloaded onto foreign-flagged ships not subject to the Jones Act to continue on to California. This Bahamian trade route has become a key part of California's supply chain as refinery closures reduce in-state production capacity.

  • In 1982, California imported about 6% of its gasoline needs from foreign sources.
  • As of last fall, the percentage of California's gasoline imports had climbed to 64%.
  • In 2000, the California gas price was approximately $0.25 higher than the national average, but by 2025 the difference increased to $1.50.

The players

Valero

An oil company that operates a key refinery in Northern California that is in the process of shutting down operations.

Phillips 66

An oil company that has closed its Los Angeles refinery, further reducing California's in-state refining capacity.

Bulat Gafarov

An assistant professor of agricultural and resource economics at UC Davis who studied the widening gap between California's gas prices and the national average.

Michael Mische

An associate professor at the University of Southern California's Marshall School of Business who has called for the repeal of regulations limiting oil production and pipeline use in California.

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What they’re saying

“This is a trend we have seen become ingrained on the US East Coast: barrels are shipped from the US Gulf Coast via the Bahamas as a way of avoiding using Jones Act vessels. It makes sense that this is increasingly happening to the US West Coast given refinery retirements and outages — and is a trend we expect to persist.”

— Matt Smith, Lead oil analyst at Kpler (Bloomberg)

“The Legislature should consider the repeal of regulations limiting production and pipeline use in more counties, assess the powers of agency bureaucrats who force higher prices on the backs of Californians, and a new regulatory strategy that will provide a more hospitable business environment for refiners and producers.”

— Michael Mische, Associate professor at the University of Southern California's Marshall School of Business (Cal Matters)

What’s next

Lawmakers in California are expected to consider policy changes to address the state's reliance on imported fuel and high gas prices, including potential regulatory reforms to encourage more in-state refining capacity.

The takeaway

California's heavy dependence on imported gasoline highlights the unintended consequences of the state's strict environmental policies, which have led to the closure of multiple refineries and a shortage of in-state fuel production. This has resulted in higher gas prices that disproportionately impact lower-income residents, raising questions about the balance between environmental goals and energy security.