India’s cooking fuel crisis tightens California’s gasoline supply, pushing prices above $6 a gallon
A 50% drop in Indian alkylate exports has exacerbated fuel shortages in the US state, where regulators and analysts debate the efficacy of waiving strict blending mandates.
The ongoing U.S.-Israeli conflict with Iran has triggered a severe disruption in global energy markets, with Iran’s near-closure of the Strait of Hormuz cutting off approximately one-fifth of the world’s oil supply. This geopolitical shock has created a direct link between India’s domestic energy security and fuel costs in California, where motorists are now paying over $6 a gallon for gasoline. The crisis stems from India’s reliance on Middle Eastern sources for more than 90% of its liquefied petroleum gas (LPG) imports, which are critical for cooking fuel in the world’s most populous nation.
To address acute domestic shortages, the Indian government has directed refiners to maximise LPG output. Consequently, major producers including Reliance Industries have significantly reduced the production and export of alkylates, a motor fuel additive derived from LPG. According to data from Kpler, India’s total alkylate exports fell to 33,000 barrels per day in April, a decline of approximately 50% from the 61,000 barrels per day recorded in March. This marks the lowest export level since October 2023, removing a key component from the global supply chain.
California mandates a unique, cleaner-burning gasoline blend to combat smog, requiring high levels of alkylates. The reduction in Indian exports has compounded existing tightness in the state’s fuel market, which is already strained by declining production and exports from Asian refiners struggling to access Middle Eastern crude. Mason Hamilton, chief economist for the American Petroleum Institute, noted that the contraction in Indian alkylate supply is adding pressure to an already constrained California gasoline market.
Retail fuel prices in California have surged in response to these supply constraints. Data from GasBuddy shows that the state’s average retail motor fuel price reached $6.16 per gallon on 7 May, a three-year high, before settling at $6.14 per gallon on Friday. This contrasts sharply with the U.S. national average of $4.52 per gallon. Analysts warn that prices could exceed $6.50 per gallon in the coming weeks as summer driving season demand increases.
The political and regulatory response to the price spike remains divided. GasBuddy analyst Patrick De Haan suggested that California Governor Gavin Newsom’s only viable option to curb rising costs may be to waive the state’s strict fuel blending specifications, thereby reducing the demand for alkylates. However, a spokesperson for the California Energy Commission disputed this assessment, stating that the state maintains a healthy supply of gasoline and blending components and does not foresee a shortfall.
