Why San Francisco gas prices could soar as high as $10 a gallon
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The new normal. Chevron's prices off Masonic Ave and Fell Street. Photo: Nadia Lopez/Axios
If filling up your tank lately feels like a gut punch, you're not alone. Gas prices in San Francisco are soaring — fueled by a collision of global oil disruptions and local supply constraints that analysts warn could get worse.
The big picture: Drivers across California are watching the cost of gas climb fast and at some stations in San Francisco, they're already nearing $7 a gallon.
- The war in Iran has triggered one of the sharpest gas price surges in recent history, while limited state refinery capacity is exacerbating the pain at the pump, experts say.
By the numbers: San Francisco was averaging about $6 as of Tuesday for regular gas, a month after it had averaged $4.83, per AAA.
- The statewide average was $5.82, while the national average was $3.97.
State of play: California is especially exposed to gas price increases. The state relies heavily on gasoline imports from Asian refineries, many of which depend on crude oil moving through the recently closed Strait of Hormuz, Ryan Cummings, chief of staff at the Stanford Institute of Economic Policy Research, told Axios.
- At the same time, supply in Northern California is tightening, with only one major refinery running at full capacity and another in the process of shutting down, he said.
- That leaves a thinner safety net and fewer backup options when supply tightens. While California can import gasoline to make up the difference, the state doesn't have sufficient infrastructure in place to bring in fuel fast enough.
- "It is a cataclysmic scenario," he said, adding that prices could reach as high as $10 a gallon in San Francisco if the Strait of Hormuz is not reopened within the next two months. "That's when you're going to see things start to get really bad."
"It's ridiculous, it's horrible — I can't pay many of my bills now," downtown resident James Millard told Axios at a Shell gas station in the Inner Sunset on Tuesday. "It's at least an extra $60 a week."
Stunning stat: Stanford economists estimate the average California household could spend about $857 more on gas from March through December this year, Cummings said.
Flashback: California gas prices last peaked at a statewide average of $6.21 per gallon in June 2022, driven by the Russia-Ukraine war.
The intrigue: Some lawmakers have called for suspending the state's gas tax — about 60 cents per gallon — as a quick way to lower prices, but it's unclear how much would reach drivers versus being absorbed by suppliers.
What's next: It could take weeks to months for prices to ease, even after the war winds down, because of what Cummings calls the "rockets and feather" effect, where prices shoot up fast but take time to decline.
- In other words, drivers feel immediate pain when prices rise, but relief at the pump lags even after crude prices or supply disruptions ease — meaning gas prices could stay elevated into the summer.