Refining Constraints Keep West Coast Gasoline Prices Up


   
Kristina Davis
DTN Refined Fuels Market Reporter

   MIAMI, FL (DTN) - Gasoline prices on the U.S. West Coast remained the 
highest in the nation in January, extending a trend that defined fuel markets 
throughout last year as refinery constraints and distribution bottlenecks 
continued to shape regional pricing.
U.S. West Coast retail gasoline prices averaged $3.705 per gallon in January, 
which was below the $3.881 per gallon average price recorded in the same period 
of 2025, according to data from the U.S. Energy Information Administration.
In 2025, the West Coast posted the highest average retail gasoline price in the 
country at $4.09 per gallon, the same data showed.

   By comparison, the Gulf Coast, home to the nation's largest concentration of 
refining and storage capacity, recorded the lowest annual average at $2.68 per 
gallon.

   Prices in other regions remained well below West Coast levels, averaging 
$3.02 per gallon in the Rocky Mountains, $2.94 per gallon in the Midwest, $2.89 
per gallon in the Lower Atlantic, $3.12 per gallon in the Central Atlantic, and 
$2.99 per gallon in New England.
Market participants say that price disparity has remained intact in early 2026, 
driven largely by the West Coast's structurally tight refining system and 
reliance on a limited number of major distribution hubs. Unlike the Gulf Coast, 
where excess capacity and extensive pipeline connectivity provide flexibility 
during disruptions, West Coast markets are more exposed to refinery outages, 
flaring events, and unplanned maintenance.
Recent EIA data show gasoline inventories in PADD 5 falling for three 
consecutive weeks through January, while crude oil and distillate balances also 
declined. At the same time, refinery operational issues, including repeated 
flaring events and announced capacity reductions, have heightened concerns 
around supply reliability heading deeper into the year.
Additional pressure has emerged in related refined product markets. Los Angeles 
jet fuel basis rose from flat levels to a 15cts premium to the front month ULSD 
futures contract in late January, underscoring how quickly prices can respond 
to tightening regional supply. Analysts say these moves reflect broader 
sensitivity across West Coast fuel markets, where inventory draws, reduced 
imports, and operational disruptions can rapidly translate into higher spot 
prices and wider basis volatility.
Supply concerns have remained in focus as refining capacity contracts in 
California. Phillips 66 halted fuel production at its 139,000 bpd Wilmington 
refinery at the end of 2025, while Valero said its 145,000 bpd Benicia refinery 
will continue producing gasoline through April 2026 before shifting supply to 
inventories and imports.

   California Governor Gavin Newsom said the revised plan is intended to 
support supply stability and limit price disruptions as discussions continue.




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