California’s gas prices are flirting with crisis levels again, and this time, it’s not just seasonal noise. Two major refineries; Valero’s in Benicia and another unidentified operator, have shut down operations due to unexpected issues. The result? Analysts now warn prices at the pump could spike to $8 per gallon in parts of the state.
“You can’t afford to lose one refinery, let alone two,” said one USC expert, calling the situation “potentially catastrophic” for supply.
The Data Behind the Panic
- California’s average gas price as of June 23: $4.85/gallon
- Analysts project a 60%+ price spike if supply isn’t stabilized
- The state already pays $1.30 more per gallon than the U.S. average due to environmental regulations and taxes
For early-stage founders and small logistics operators, this could be a margin killer. And here’s why you should care:
High gas prices hit different when you’re:
- Running a delivery startup
- Managing fleet-dependent operations
- Offering on-the-ground services like cleaning, repair, or food trucks
Every extra dollar at the pump eats into your CAC, LTV margin, and delivery window flexibility.
If you’re still building in stealth or pre-revenue, this is the kind of real-world volatility that can break an early model.
What You Can Do (Right Now)
- Renegotiate delivery contracts: Add dynamic pricing based on fuel costs.
- Switch to hybrid or EV fleets: California offers rebates up to $7,500 on electric vans.
- Consider alternate markets: If you’re piloting in CA, test in lower-cost states like Nevada or Texas.
- Factor fuel into your runway: If you’re budgeting the next 12 months, update your burn rate assumptions now.
The Bigger Picture
This is yet another signal that startups need to build operational flexibility into their model. Gas prices, like interest rates and global supply chains, are no longer stable backdrops. They’re wild cards.
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