California Signs E15 Law to Cut Gas Costs Amid War Spike
California approved E15 fuel blends to lower prices, yet average gas costs remain at $6.17 due to geopolitical tensions.
Key points
- California signed Senate Bill 795 to allow E15 fuel, potentially saving drivers 20 cents per gallon.
- California’s average gasoline price hit $6.17, the highest in the U.S., due to the Iran conflict.
- Diesel prices in California reached $8.42, a record high, while national gasoline averages sit at $4.48.
California’s average gasoline price hit $6.17 per gallon this week, the highest in the nation. Governor Gavin Newsom signed Senate Bill 795 to allow higher ethanol blends, aiming to reduce this cost.
The legislation removes regulatory barriers for E15 fuel, which contains 15 percent ethanol. California was the last state restricting blends to E10, limiting potential savings for drivers.
Ethanol price gap drives cost reduction
Los Angeles petroleum spot prices stood at $4.27 per gallon on Friday. Ethanol spot prices reached $2.49, creating a nearly two-dollar difference per gallon.
A UC Berkeley study estimated E15 adoption saves drivers 20 cents per gallon. This financial relief assumes the market fully transitions to the higher ethanol blend.
War disrupts global fuel supply chains
The conflict in Iran has blocked tanker traffic through the Strait of Hormuz. This waterway normally carries 20 percent of global petroleum products, severely limiting supply.
U.S. households paid $410 more at the pump since the war began. San Diego gas prices rose $1.49, reaching $6.23, while national averages sit at $4.48.
Market uncertainty obscures future price trends
JP Morgan strategists stated they lack a baseline view for modeling the endgame. Analysts cannot predict how long the supply disruption will persist or impact prices.
Diesel prices in California reached $8.42 per gallon, marking a historic high. The Institute on Taxation and Economic Policy reported these figures as of Monday.
