Fueling The Conversation, Week of April 20th, 2026
When faced with the consequences of bad policy decisions, moving forward typically involves choosing among three options. The first and best option is to take accountability and do what you can to fix the situation. The second involves avoiding accountability while quietly amending the error and changing policy direction. The third option is blind obedience to the previously failed policy, hoping that something will magically change, while pointing the finger elsewhere for the failure.
For most, option number one is not even on the table. It is the rare politician who will own up to their failures. The second option is a dishonest approach, but usually as much as we can hope for. The third option is the preferred path for most politicians, and nobody does it better than California Governor Gavin Newsom.
Despite years of gas prices well above the national average, Governor Newsom continues to avoid accountability. Whether it be corporate greed, climate change, or President Trump, Governor Newsom has consistently pointed the finger elsewhere when explaining the state’s energy woes. The Iran War’s disruption of oil exports through the Strait of Hormuz has given Newsom a new culprit to pin his failures on. As he claimed in a press release:
“Trump’s Iran war is costing Americans $1.5 billion more at the pump this week alone, and what are Americans getting in return? Not better roads. Not cleaner air. Just higher prices as corporations pocket the higher prices and cash in on Trump’s chaos. ‘Drill Baby Drill’ was always a lie to enrich Trump’s Big Oil donors — not a strategy to keep prices low, because oil is a global good with a global price.”
Like many tall tales, there is usually a kernel of truth to underpin them. It’s accurate that the oil supply shock raised California’s fuel costs, but it has done so across the country and around the globe. According to Reuters, the war could force gas prices above $10 per gallon in the state. In March, average regular gas prices rose by $1.21 for California, versus $1 across the country. But it is no surprise that closing the Strait of Hormuz would have this effect because “[m]ost volumes that transit the strait have no alternative means of exiting the region,” as the U.S. Energy Information Administration explains.
But these facts don’t explain why California’s gas prices on April 20 are sitting at over $5.84 per gallon — the highest in the country — while the U.S. as a whole averages $4, or why the average price of regular gas in California rose by 38 cents from January to February 2026, before the strikes in Iran. The reason California, once the third-largest oil-producing state in the U.S., now relies on significant gasoline imports from places like the Bahamas requires a greater understanding of economic realities than Governor Newsom seems unwilling to accept.
The price of oil and its derivatives acts the same as the price of any other commodity in that they respond to the laws of supply and demand. When supply is reduced and demand increases, prices will obviously rise. Consumers will bemoan the high prices, but as long as politicians stay out of the way, oil producers will see profit opportunities, increase supply, and prices will eventually fall.
With ample oil reserves, the U.S. is in a prime position to meet the challenge of supply shocks by ramping up production. Compared with Europe and Asia, which rely more on imports than the U.S., American oil companies can replace the barrels lost in the Strait relatively quickly. This replacement has been ongoing for decades, with U.S. crude oil imports from the Persian Gulf in 2024 at the lowest level in nearly 40 years and production at record highs. The effect on prices is apparent. The U.S. ranked in the top quarter of countries for cheapest gasoline three days into the war. Contrary to Governor Newsom’s gripe, “Drill, Baby, Drill” is working as intended by depressing prices.
Instead of seeking to pin the blame for his state’s failures on President Trump, Newsom would be wise to learn a few lessons from the president’s energy policy of deregulation-fueled abundance. Despite its vast oil reserves, California has actively sought to make it harder for energy producers to operate in the state through policies such as “cap-and-invest,” a 50% by 2050 Renewable Portfolio Standard, boutique fuel blend requirements, and the highest gasoline tax in the nation. These policies, alongside an adverse regulatory environment, have led to high gas and electricity prices, refinery closures, and a lack of pipelines, making the state an energy island. As IER’s Caleb Jasso wrote for the Washington Examiner, “The ultimate cause of California’s high gas prices and overall outrageous cost of living is poor leadership, arrogance, and, quite possibly, political indifference.”
Unless Governor Newsom admits his errors and embraces an energy policy focused on facilitating production, California will continue to fare much worse during supply shocks. Given his record, however, the safer bet is that Governor Newsom will continue to look elsewhere for new culprits to blame for his failures. He is, after all, a seasoned politician.
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Fueling the Conversation, a weekly column by IER President Tom Pyle, offers a principled take on energy events. Energy underpins all aspects of modern life, so policies that artificially limit production hurt everyday people paying to heat their homes and drive to work. “Green” groups push these policies for ideological reasons, but this column uses economic logic and hard facts to advocate for energy freedom.
