Stranded: West Coast Fuel Supply & Strategic Vulnerability

West Coast fuel supply is becoming more fragile just as Indo-Pacific geopolitical risks are rising, turning what might look like a regional market issue into a strategic vulnerability for commercial, governmental, and military fuel users alike. Stillwater Associates was recently asked to brief the Navy’s Energy Forum about this structural fragility and why sophisticated planning around crude flows, refining, and logistics is now a prerequisite for energy security on the West Coast. You can view our presentation here and read on to glean what we had to say alongside those visuals.

Policy-driven structural change
For decades, West Coast energy policy, especially in California, has been explicitly focused on reducing petroleum production and consumption to address climate concerns. As environmental and clean-fuels regulations have tightened, conventional refining has become progressively less economic, nudging refineries toward conversion, closure, or under-investment. That policy trajectory is now colliding with rising product demand from aviation, freight, and shifting Indo-Pacific trade flows.

Refining capacity on the West Coast began declining in 2021 and the pace of change accelerated in 2024, when a series of refineries either shifted away from conventional fuels or announced permanent shutdowns. These are not short-term outages; once capacity exits, it is very difficult and costly to bring back, particularly in high-cost, highly regulated jurisdictions.

Refinery closures and an “energy island”
The West Coast is anchored by three major refining centers: the Pacific Northwest, the San Francisco Bay Area, and the Los Angeles Basin. Several refineries in these hubs have already stopped producing conventional gasoline, jet, and diesel in favor of renewable diesel and sustainable aviation fuel, while others have announced full closure.

At the same time, the West Coast operates as an effective island from a fuels perspective. There are no crude oil pipelines connecting this market to production east of the Rockies, and in-state crude production, particularly in California, is now just a shadow of its former self. Nearly all crude must arrive by tanker, and the product pipeline network that serves Arizona, Nevada, Oregon, and Washington has very limited surge capacity. When an “island” system loses local refining capacity, it becomes increasingly dependent on long, vulnerable supply chains.

Crude oil is the binding constraint in the West Coast fuel system. No crude means no refinery throughput, and no refinery throughput means no gasoline, jet fuel, or diesel – regardless of how high prices spike or how strong demand remains.

Today, the remaining West Coast refining system is structurally short of both crude and finished products, and imports close the gap. Roughly 25 percent of West Coast crude supply now comes from the Middle East, primarily Saudi Arabia, Iraq, and the UAE. Jet fuel has been structurally short for years and is largely imported from Korea, while gasoline imports increasingly originate from India and Northeast Asia, including Japan and Taiwan. Every one of these flows is exposed to maritime risk, chokepoints, and geopolitical tension.

Indo-Pacific exposure and strategic risk
Those import patterns mean West Coast fuel security is now tightly coupled to Indo-Pacific refining hubs and shipping lanes. Tankers carrying crude, gasoline, jet fuel, and diesel from the Middle East and Asia traverse busy, contested sea lanes before ever reaching West Coast ports.

Indo-Pacific Refineries and Shipping Lanes to the U.S. West Coast

In this context, an upstream disruption – whether geopolitical (conflict, sanctions), logistical (port strikes, canal closures), or maritime (attacks, blockades, piracy) – can rapidly translate into “no crude in and no fuel out.” For commercial fuel users, that shows up as price spikes, allocation, and lost optionality; for the Navy and other defense stakeholders, it is a direct readiness issue for Indo-Pacific operations. Fuel resilience on the West Coast is no longer just a commercial planning problem – it is a strategic planning requirement.

A structural solution: reconnecting to U.S. crude
Because the constraint is structural, the most durable solutions must also be structural. Stillwater’s work highlights one such option: a large-scale crude oil pipeline from the Permian Basin to Bakersfield, tying into California’s existing crude pipeline network and supporting new refining capacity oriented toward Nevada and Arizona (as shown below).

The logic is straightforward. Last year, the U.S. Gulf Coast exported nearly four million barrels per day of crude oil, including about one million barrels per day to Asia. Redirecting a portion of that flow to be refined domestically – via a million-barrel-per-day pipeline delivering Permian crude to California – would materially enhance West Coast fuel resilience, reduce dependence on Middle East and Asian imports, and create additional flexibility for both commercial and defense customers. Designing such a system requires rigorous analysis of flows, quality, regulatory risk, and capital allocation across multiple jurisdictions.

How Stillwater can help
Stillwater Associates brings together deep operational experience in global crude and product logistics with granular knowledge of West Coast policy, regulatory regimes, and infrastructure constraints. Our team has worked from the wellhead through refinery operations to end-use markets, and we are routinely engaged to explain how fuel actually moves, where systems are most fragile, and how policy and market shifts ripple through supply chains.

For clients across government, military, and industry, we can provide:

• Quantitative assessments of West Coast fuel resilience under a range of disruption scenarios, including Indo-Pacific maritime risk.
• Detailed flow modeling that links crude supply options, refinery throughput, and product availability at key demand centers.
• Strategic evaluations of infrastructure options – such as pipelines, storage, and refining configurations – that can materially improve security of supply.
• Policy and regulatory analysis that translates complex West Coast climate and fuels programs into actionable commercial and investment decisions.

If your organization depends on reliable access to gasoline, jet fuel, or diesel on the West Coast – or if Indo-Pacific operations are core to your mission – now is the time to stress-test your fuel strategy and explore structural solutions. Contact us today to discuss the types of tailored analysis and strategic guidance Stillwater can provide to help you navigate this evolving landscape.