India’s LPG crisis pushes California gasoline prices above $6

Tuesday 19 May 2026 - 07:21

By: Dakir Madiha

India’s LPG crisis pushes California gasoline prices above $6

California gasoline prices have surged past six dollars per gallon as the conflict involving Iran, Israel, and the United States disrupts global energy supply chains and reshapes fuel production priorities in India. The crisis has linked cooking gas shortages in South Asia to mounting pressure on American fuel markets, exposing the fragility of interconnected energy systems.

The disruption began after Iran sharply restricted traffic through the Strait of Hormuz, a strategic maritime route that previously carried roughly one fifth of global oil supplies. India, which depends on the passage for around 90% of its liquefied petroleum gas imports, responded by ordering refiners to increase domestic LPG production to secure cooking fuel supplies for households. Indian authorities said national LPG output rose by 28% following the emergency measures.

To expand LPG production, refiners redirected propane and butane away from petrochemical operations and gasoline blending components. This shift reduced the output of alkylates, high octane fuel ingredients used heavily in cleaner gasoline blends. Reliance Industries, which operates the world’s largest refining complex in Jamnagar, confirmed it had reduced alkylate production and exports to prioritize LPG manufacturing. Shipping data showed India’s alkylate exports fell to 33,000 barrels per day in April, down from 61,000 barrels per day in March and the lowest level recorded since October 2023.

California has been hit especially hard because of its strict environmental fuel regulations, which require cleaner gasoline formulas that rely heavily on alkylates. The state also faces reduced refining capacity after recent refinery closures, including Phillips 66’s Wilmington facility and Valero’s Benicia refinery. Analysts say the simultaneous loss of local refining capacity and reduced imports has tightened supply conditions across the state.

Fuel tracking data showed California’s average gasoline price reached about $6.15 per gallon this week, the highest level since 2022. Prices first crossed the six dollar threshold at the end of April and continue to rise as uncertainty surrounding Middle East energy flows persists. Energy officials in California warned lawmakers that fuel supplies appear stable only through mid June, after which replacement imports may become significantly more expensive.

Analysts say policymakers have limited options to contain the surge. Temporary fuel tax reductions could increase demand and worsen shortages. Some experts argue that easing California’s fuel quality standards may offer the fastest path to reducing dependence on imported alkylates during the crisis. Governor Gavin Newsom’s administration now faces growing pressure to stabilize prices as motorists absorb the economic fallout from a conflict unfolding thousands of miles away.