California Gas Prices Soar Amidst U.S.-Iran Tensions and Unique State Vulnerabilities

California drivers are bracing for potentially record-high gas prices, with experts warning of a surge to $7 a gallon or more as escalating tensions between the U.S. And Iran disrupt global oil markets. The state’s unique energy landscape, coupled with existing financial pressures, is exacerbating the situation, prompting calls for temporary relief from state gas taxes.

Current Gas Price Situation in California

As of Wednesday, March 12, 2026, the average price of regular unleaded gasoline in San Diego stood at $5.40 a gallon, an 81-cent increase from the previous month, according to AAA . Statewide, the average was $5.35, already the highest in the nation. Some stations near San Diego International Airport were charging as much as $6.29 a gallon.

Expert Predictions and Contributing Factors

Michael Mische, an associate professor at USC’s Marshall School of Business, estimates that gas prices could range from $7.24 to $8.43 a gallon in a worst-case scenario. His projections consider California’s specific vulnerabilities, including its heavy reliance on foreign oil (importing over 60% of its crude oil), dwindling refinery capacity, and the upcoming transition to a more expensive summer fuel blend, which automatically adds 15 to 17 cents per gallon.

The conflict has disrupted oil shipments through the Strait of Hormuz, a critical waterway for roughly 20% of the world’s oil supply.

Calls for Gas Tax Suspension

In response to the rising prices, a group of Republican state lawmakers is pushing to temporarily suspend California’s 61-cent per gallon state excise tax on gasoline for one year. Assemblywoman Lauri Davies argues that drivers are facing unsustainable financial burdens, with some construction workers reportedly being forced to sleep in their trucks due to fuel costs.

California currently has the highest state gas taxes in the nation, totaling approximately $1.24 per gallon when including the low carbon fuel standard, cap and trade fees, and other regulatory costs.

Governor Newsom’s Response

Governor Gavin Newsom has attributed the price spike to President Trump’s military strikes on Iran, claiming they are costing Americans $1.5 billion more at the pump this week alone. Newsom’s office argues that suspending the gas tax would primarily benefit oil companies rather than consumers, citing a similar outcome in Florida.

FBI Warning of Potential Drone Attacks

Adding to the state’s concerns, the FBI recently warned California police departments that Iran could retaliate for U.S. Strikes by launching drones at targets on the West Coast. The alert, distributed in late February, indicated that Iran allegedly aspired to conduct a “surprise attack” using unmanned aerial vehicles from an unidentified vessel. Governor Newsom stated that the state is aware of the potential threat and is working with local partners to address it.

Looking Ahead

The situation remains fluid, and the future of California gas prices will depend on the duration and intensity of the U.S.-Iran conflict, as well as any policy changes implemented by state and federal officials. Mische cautions that, historically, “prices go up like a rocket, they come down like a feather.”