Southwest Braces for Gas Price Hike as California Refinery Closures And Iran Conflict Tighten Supply

Drivers across the Southwest could face higher fuel prices in the coming weeks as refinery closures in California and escalating tensions in the Middle East tighten fuel supplies and increase volatility in the crude oil market.

Energy analysts and fuel market observers warn that California’s shrinking refining capacity — combined with global supply risks tied to conflict involving Iran — could ripple across neighboring states, including Arizona and Nevada.

As previously reported by the California Globe, industry leaders have warned that California’s regulatory structure and refinery shutdowns are steadily reducing in-state refining capacity. The state currently has seven refineries supplying its gasoline market, but companies have warned that regulatory pressure and operational costs are discouraging long-term investment in refining infrastructure.

Energy companies have cautioned that continued refinery closures could significantly reduce the state’s ability to produce fuel domestically, increasing reliance on imports and exposing prices to greater volatility.

At the same time, global energy markets are reacting to heightened geopolitical tensions in the Middle East.

According to reporting by the Washington Examiner, analysts warn that any disruption to shipping through the Strait of Hormuz, a critical oil transit chokepoint that carries roughly one-fifth of global petroleum supplies, could quickly drive up global fuel prices.

Oil traders closely monitor the waterway because even limited disruption can tighten global supply and push crude prices upward, which typically translates into higher gasoline prices for consumers.

Regional data already suggests upward pressure on fuel prices.

According to the fuel price-tracking site GasBuddy, average gasoline prices in Phoenix have risen sharply in recent weeks following the typical winter price decline.

GasBuddy’s 18-month retail price chart shows Phoenix fuel prices climbing rapidly through February and early March 2026 after hitting a low point earlier in the winter.

Individual stations across western Arizona are also reporting rapid price adjustments. One western Arizona station manager reported that regular unleaded rose from $3.17 to $3.22, then to $3.35, within the first 48 hours after the conflict began, reaching $3.43 as of Tuesday morning.

According to reports highlighted by The Post Millennial, California Governor Gavin Newsom warned gasoline prices could remain elevated for months and attributed potential increases in part to geopolitical tensions following U.S. strikes on Iran ordered by President Donald Trump. Newsom said the conflict could disrupt global oil markets and push fuel costs higher, as traders react to instability affecting Middle Eastern supply routes.

Rep. Vince Fong (R-CA20) held a different view, saying in a statement posted to X, “In Governor Newsom’s never-ending quest for headlines, he refuses to own the consequences of his reckless policies —and those of his progressive allies in Congress.”

In Governor Newsom’s never-ending quest for headlines, he refuses to own the consequences of his reckless policies —and those of his progressive allies in Congress.

A nuclear-armed Iran with ballistic missile capabilities is a clear and present danger to the United States.… https://t.co/9zQnGn2kOO

— Vince Fong (@RepVinceFong) March 2, 2026

He called out Newsom’s policies as contributing to the increased gas prices stating, “His policies have made our state increasingly dependent on foreign oil while dismantling in-state production, jeopardizing pipeline infrastructure, and crippling our refining capacity. Now, California is weaker and more exposed to foreign powers than ever before.”

Fuel markets in the Southwest are particularly sensitive to disruptions affecting California because Arizona and Nevada import significant volumes of refined fuel from California refineries.

As a result, analysts warn that any loss of refining capacity in California — combined with global supply shocks — can have immediate price effects across the region.

With California’s refining capacity continuing to shrink and global oil markets reacting to geopolitical instability, energy analysts warn that price shocks originating in California could increasingly reverberate across fuel markets throughout the Southwest.