US provides of gasoline are being shipped overseas to journey hundreds of miles through the Bahamas earlier than lastly ending up in California, a state battling shrinking fuelmaking capability and excessive pump costs.
Shipments on the circuitous route are growing. California imported extra gasoline in November than ever earlier than, with greater than 40% coming from the Bahamas.
The prolonged journey provides one other layer of price to California’s already costly gasoline market. But the phenomenon isn’t prone to disappear quickly, due to a mixture of disappearing oil refineries, a scarcity of interstate pipelines and a loophole in a 106-year-old maritime legislation.
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California has among the many strictest environmental rules within the US, making it expensive for power firms to function in, although a wave of upcoming refinery closures is prompting officers and regulators to melt their stance. On common, the closures might elevate the price of gasoline for customers by between 5 and 15 cents a gallon, mentioned Patrick De Haan, GasBuddy’s head of petroleum evaluation.
After Phillips 66 shuttered its Los Angeles refinery in October, gasoline imports climbed in 2025 to the very best stage since at the very least 2016, Vortexa knowledge present. With Valero Vitality Corp. set to shut a Northern California refinery this spring, and no gas pipelines connecting the US Gulf’s oil-producing powerhouse to the West Coast, the nation’s most populous state will seemingly rely upon imports to bridge the hole.
Below the Jones Act, any items shipped between US ports should journey on US-built, owned and operated vessels. These tankers are in brief provide and costly to constitution. There are about 55 Jones Act-compliant oil tankers worldwide, in contrast with greater than 7,000 oil tankers globally.
“Even when there are such vessels, they’d cost greater than a foreign-flagged vessel would,” mentioned Martin Davies, director of Tulane College’s Maritime Legislation Heart.
When California’s specialised gasoline trades at a premium, significantly throughout refinery outages, Gulf Coast refiners can seize increased margins by sending barrels west, De Haan mentioned. Routing by the Bahamas permits them to keep away from higher-cost US-flagged delivery and protect that unfold.
In these moments, “there’s going to be loads of incentive for PADD 3 (Gulf Coast) and Asian refiners to produce Californians,” De Haan mentioned.
The commerce has accelerated. Final yr, California sourced extra barrels of gasoline from the Bahamas than it had within the prior 9 years mixed – accounting for roughly 12% of gasoline arriving in California by ship all yr, together with direct deliveries from elsewhere within the US, based on Vortexa.
Imports of gasoline had been down from their fall peak in January, based on Vortexa. Japan and India each made up a larger proportion of overseas provide — although the Bahamas was the third-leading non-US provider.
Asia is a extra sensible supply of gasoline for California, De Haan mentioned, noting that refineries within the area already produce gasoline blendstock on the grade particularly required by California, and it might probably arrive with out paying to transit the Panama Canal. Each India and South Korea provided extra product to California final yr than the Bahamas.
The financial enchantment of delivery US-refined gasoline on cheaper overseas vessels has been waning in latest months, after the US eased sanctions on Venezuela, a transfer that triggered a rise in regional freight costs. International ships, which had been practically $4 a barrel cheaper than US-flagged ones up to now yr, at the moment are barely $1 cheaper, knowledge from Argus Media present. If freight prices proceed to rise, shipments of US gasoline might turn out to be too costly to compete with provides from South Korea or India.
Nonetheless, the Bahamian commerce route, which started choosing up steam within the early months of 2025, has turn out to be a key piece of California’s troubled provide chain. Already this yr, two tankers carrying gasoline have arrived in California from the Bahamas, based on customs knowledge.
Some of the latest voyages was made by the Singapore-flagged Silver Moon, which delivered practically 300,000 barrels of gasoline blendstock to the Los Angeles space in early January after loading in Freeport in mid-December. The vessel transited the Panama Canal and was consigned to Houston-based refiner Phillips 66. The corporate not too long ago leased storage tanks within the Bahamas, based on individuals with information of the scenario.
Phillips 66 declined to remark.
Earlier this month, the Torm Dulce made the identical voyage and delivered gasoline blendstock to San Francisco. The trail mirrors a longer-standing workaround to convey gas to the East Coast when it’s shipped exterior pipeline techniques, mentioned Matt Smith, lead oil analyst at Kpler.
“This can be a development we’ve got seen turn out to be ingrained on the US East Coast: barrels are shipped from the US Gulf Coast through the Bahamas as a means of avoiding utilizing Jones Act vessels,” Smith mentioned. “It is sensible that that is more and more occurring to the US West Coast given refinery retirements and outages — and is a development we anticipate to persist.”
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