Con Edison had decided the N.Y. grid could not handle the load, saying the shutoffs were necessary to reduce strain on the grid, protect equipment, and speed up restoration. The company also cut voltage by 8% in areas of the city as a precaution to protect equipment and keep service running while crews worked.

While Riverdale residents were cut off from electricity on July 2, Madison Square Garden had the electric power to host a rehearsal dinner for the wedding of Taylor Swift and Travis Kelce. The couple planned to marry at the Garden on July 3rd, with a reception expected to run into Saturday morning, with about 1,000 guests attending. The dichotomy was clear between providing electricity to the ultra-rich and to a working-family neighborhood.

New York City’s electrical grid strains each summer, most likely due to the city’s population density, aging infrastructure, and growing electrification mandates. The state has been reducing dispatchable energy resources, including nuclear power, as part of its energy transition policy. The N.Y. grid needs investment, maintenance, and realistic planning. But New York is a blue state that suffers from fracking bans and climate policies that increase the cost of electricity for its residents without providing reliability. Reliable infrastructure is a core responsibility of government and the public utilities that serve Americans. While Con Edison made the operational decision on July 2, the city sets infrastructure priorities, negotiates utility agreements, and decides which neighborhoods receive investment and which receive information about cooling centers.

In response to that responsibility, New York Governor Kathy Hochul has a new proposal for residential customers that grid operators call “demand response,” which is used with large commercial and industrial companies. The customer allows the utility company to adjust the home’s “smart thermostat” by a couple of degrees on days when electricity usage is high, which would reduce air conditioning use during heat waves and save energy. In turn, the utility company would reduce the household’s electric bill by $25 a month for a full year, for a total of $300. The demand response proposal allows Hochul to avoid the real investment the N.Y. power grid needs while increasing the centralization of control over individuals’ choices.

New York’s Climate Policies

Under the Climate Leadership and Community Protection Act (CLCPA), New York must reach 70% renewable energy by 2030 and net-zero electricity by 2040. To meet the target, the state has been promoting very expensive offshore wind power off the coast of Long Island, as the law requires 9,000 megawatts of offshore wind energy by 2035. It also requires 6,000 megawatts of solar energy by 2025 and 3,000 megawatts of energy storage by 2030. The state also has targets to cut greenhouse gas emissions by 40% from 1990 levels by 2030 and by 85% by 2050.  These policies require substantial investments in wind and solar, as well as a statewide “cap-and-invest” system that has yet to be implemented.

In a cap-and-trade-and-invest program, large greenhouse gas emitters, such as industrial facilities, electric utilities, and/or fossil fuel suppliers, must meet a “cap” on emissions set annually by the state. The firms can reduce their emissions or purchase allowances from the state to emit carbon dioxide. They can also trade allowances with other firms. The price of the allowances is determined by the market and reflects the difficulty of reaching the cap set by the state. The revenues from the allowances are to be spent on carbon emissions-reducing programs. The companies that must participate raise their product prices based on the cost of the allowances they are forced to buy, thereby making energy more expensive for New Yorkers.

The program is similar to the Regional Greenhouse Gas Initiative, a regional cap-and-trade program that covers electric utility companies, of which New York is a member. There are 11 participating East Coast states, including New York. The other states are Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, Rhode Island, Vermont, and Virginia. Virginia recently rejoined after the state’s previous governor, Youngkin, had removed the state from the program. It is estimated that Virginians will pay $13 more per month on their residential electric bills starting in March of next year and continuing through February 2028, with Dominion Energy, Virginia’s primary utility, covering the costs of the program. Those costs could decrease if spread out over a longer time period, but new costs could be added as the emissions cap is reduced.

The state has continually found ways to tax residents in the name of climate change. N.Y. Governor Kathy Hochul signed a law mandating that the largest fossil fuel companies—deemed responsible for carbon dioxide emissions from 2000 to 2018—contribute $3 billion annually to a climate mitigation fund for the next 25 years. The companies that are taxed will add those costs to New Yorkers’ energy bills. The state’s Climate Superfund Act has not been implemented, as 22 states have sued to halt its implementation.

Conclusion

The Democratic-leaning Progressive Policy Institute warns that New York’s climate targets are veering out of reach as the state is far off pace: offshore wind capacity is just 1% of what’s needed for 2030, and energy storage stands at only 8%. Fossil fuels still produce nearly half of New York’s electricity, and the closure of the Indian Point nuclear plant in Westchester has further hindered progress toward the state’s clean-energy goals. Yet the state’s residents are paying increasingly high energy prices. Electricity prices are 44% higher than the national average. Residential electricity rates have risen by 36% since 2019, nearly three times as fast as in the rest of the country. Furthermore, NY utilities are pursuing additional rate hikes of around 20%, as investments in renewables have diverted funds from operating costs, routine infrastructure maintenance, and storm repairs.

The post New York City Cuts Power During July 4th Heat Wave appeared first on IER.

A few tankers continue to transit the Strait of Hormuz, though the number is unclear since some vessels switch off their transponders to avoid detection. The few vessels that transit, however, are a fraction of those that transited before the war with Iran, which began at the end of February.

According to President Trump, the Strait of Hormuz is open to commercial traffic, although Iran had ​declared the ​strait closed after it attacked a vessel that traveled on ⁠an unapproved route near the Omani coastline, which reignited attacks by both sides.  CNBC reports that the southern route through Oman’s waters remains open to inbound and outbound traffic, citing a statement from the Joint Maritime Information Center, a U.S.-led naval coalition in Bahrain that provides security updates to civilian ships transiting the Middle East. Iran’s top joint military command had earlier said it would not allow the United States ⁠to intervene in the management of the strait and that any attempt to transit without its authorization would be confronted.

President Trump also announced that the United States was reinstating a naval blockade on Iran and that the United States would “be reimbursed, at the rate of 20% on all cargo shipped, for any and all costs necessary to do the job of providing safety and security to ​this very volatile section of the World.” Opposing Trump’s proposal, the UN’s shipping agency said it was opposed to any fees for straits used for international navigation, stressing that there is no legal basis for introducing mandatory tolls on strait transits.

Due to the strikes over the July 11/July 12 weekend, Brent oil futures, the international benchmark, rose 5.3% to $80 per barrel. West Texas Intermediate futures were 5.3% higher at $75.18 a barrel.

Europe’s Jet Fuel Inventories

Until war ​broke out at the end of February, Europe had relied on the Middle East for around half of its jet fuel imports. A supply deficit is expected across Europe ​of nearly 600,000 barrels per day in the third quarter, while the United States expects to see surpluses of 116,000 barrels per day and the Asia-Pacific region expects to see surpluses of 425,000 barrels per day. Reuters reports that Europe’s jet fuel inventories were at 38 million barrels at the start of June, which leaves Europe with less than 30 days of demand cover. Europe has imported jet fuel from the United States and Asia, raised its refiners’ output, and drawn on stocks to keep planes in the air. Britain, France, and Germany are particularly vulnerable due to decades of refinery closures, making them more reliant on Middle Eastern shipments via the Strait of Hormuz.

More Oil Pipeline Capacity to Bypass Hormuz

Some analysts expect countries to develop ways to permanently bypass the Strait of Hormuz. According to Reuters, Goldman Sachs estimated that expanding pipeline capacity in the Middle East could shield more than 60% of pre-war ‌Gulf oil ⁠exports from future Hormuz disruptions by the end of 2028. The bank’s base-case forecast assumes pipeline capacity will increase by 3.8 million barrels per day by the end of 2027 and by 7.3 million barrels per day cumulatively by the end of 2028, taking total effective bypass capacity to more than 14 million barrels per day by the end of 2028.

Saudi Arabia is considering expanding the capacity of its East-West oil pipeline by up to 2 million barrels per day, allowing more exports to bypass the Strait of Hormuz. The existing East-West pipeline can now ship up to 7 million barrels per day from the country’s eastern oil fields to the Red Sea export terminal at Yanbu. About 2 million barrels per day are for domestic refinery use, and about 5 million barrels per day are for export. Like Saudi Arabia, the United Arab Emirates (UAE) can avoid the strait by using its oil pipeline to Fujairah, which carries up to 1.8 million barrels per day. The country has completed half of a new West-East pipeline that will double its crude oil capacity when it becomes operational next year.

Conclusion

The conflict in Iran continues with the United States and Iran exchanging strikes and oil prices increasing toward $80 a barrel. Iran considers the Strait of Hormuz closed as it does not recognize transit near Oman’s coast as a viable passageway. Vessels continue to use it, risking attacks from Iran. The United States is reinstating its naval blockade on Iranian ports, and President Trump has suggested the U.S. charge for safe and secure passage via the strait. At four and a half months into the conflict, oil, petroleum products, and natural gas stocks are running very low, with some nearing their operational minimum levels. Some analysts expect Middle East producers to work on ways to bypass the strait in the future, most likely by building pipelines.

The post As the Iran Conflict Continues, Energy Stocks Are Being Drawn Down appeared first on IER.

The study reveals a price gap of 55 cents per gallon between Blue and Red states. On the West Coast, this gap is even larger, climbing to 91 cents per gallon. This disparity is the result of direct policy decisions, including accumulated environmental regulations, high fuel taxes, and refining constraints.

Tom Pyle, President of the Institute for Energy Research, issued the following statement:

“This new report asks and answers a straightforward question: why is there such a large gap in the price of fuel between states controlled by Democrats and those governed by Republicans? The answer, just like we found with the price of electricity, is directly related to policy.  

“While steadily rising gasoline prices nationally are taking a bite out of household budgets, some states consistently pay more on average for a gallon of gasoline. Pundits point the finger at the situation in the Middle East, but the data tells the whole story. The persistent fuel price gap between Blue and Red states is no coincidence; it is a choice.  

“Current global politics has certainly played a role in the current pain at the pump, but that’s not the full picture. Much like with electricity rates, states play an outsized role in determining what motorists pay at the pump. For over a decade, Blue state politicians, especially on the West Coast, have made very deliberate policy choices that have steadily increased fuel prices in those states. Every passage of a fuel tax or carbon tax at the local level is passed on to consumers and directly impacts what drivers pay at the pump. The bottom line is this: state energy policies matter, and elections have real consequences.”

Key Findings From the Report: 

• The Party Gap: In early 2026, states under unified Democratic control averaged $3.69 per gallon for regular retail gasoline, while unified Republican states averaged $3.14 per gallon—a gap of $0.55 per gallon. Over the full 2017–2026 data window, this gap averaged roughly $0.45.
• The Root Causes: Approximately two-thirds of this price difference is directly traceable to four measurable factors: state gasoline taxes, federal reformulated-gasoline rules, the West Coast refining region, and California-specific fuel costs.
• The Pacific Premium: The West Coast price premium (after adjusting for taxes and isolation) hovered between $0.20 and $0.44 per gallon from 2017 to 2021. By 2026, that premium climbed to $0.91 per gallon, driven largely by new carbon tax programs and a steep loss of regional refining capacity.
• Policy Accumulation: A state’s cumulative years of Democratic control since 2001 is a stronger predictor of its 2026 gasoline prices than its current party alignment. Each additional year of unified control since 2001 adds an average of 3.6 cents per gallon to today’s pump prices.

IER Experts Available For Interview On This Topic:

• Tom J. Pyle, President
• Kenny Stein, Vice President of Policy
• Alexander Stevens, Manager of Policy and Communications
• Daniel Simmons, Adjunct Fellow
• Caleb Jasso, Senior Policy Advisor

Additional Background Resources From IER:

• The Pacific Premium: Why Gasoline Costs More in Democratic-Controlled States
• Nothing Like Raising Your Taxes to Celebrate America’s Independence
• California’s High Gas Prices Are Unnecessary

For media inquiries, please contact THOMAS.PYLE@IERDC.ORG

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Another Canadian pipeline project was announced by the premiers of Alberta and Ontario. The proposed 3,300-kilometer (2,051-mile) pipeline, called the Northern Shield Energy Corridor, would transport an estimated 500,000 barrels per day of oil from Western Canada to refineries in southern Ontario, with the potential to expand to 800,000 barrels per day. A feasibility study is to be completed by the end of this year and will estimate costs and provide commercialization options. A new cross-Canada oil pipeline would allow Canadian producers to avoid moving oil through the United States, as is done on Enbridge Inc.’s Line 5, which crosses the border in Ontario and connects with another line that moves oil to Quebec. The Northern Shield proposal is being discussed with Canada’s Major Projects Office, a federal entity that aims to expedite regulatory approvals. The provincial government is also beginning consultation with Indigenous communities. The pipeline could eventually allow for oil from Alberta to be exported to Europe. Ontario is also considering creating its own strategic petroleum reserve.

Canada is looking to add more than 2 million barrels per day of capacity to ship oil from Western Canada. That includes Enbridge Inc.’s Mainline expansion and the new Bridger conduit from Alberta to Wyoming, an expansion of the existing Trans Mountain system that would add 300,000 barrels per day of capacity.

Carney’s Emissions Forecast

According to Prime Minister Mark Carney, Canada’s greenhouse gas emissions will be higher in the coming years than previously projected, suggesting that the country’s near-term climate targets will likely not be reached. The comments indicate that cutting carbon dioxide emissions by 40% to 45% below 2005 levels by 2030, Canada’s commitment to the Paris climate agreement, will be difficult to achieve under current policies. Instead, he has emphasized a 2050 net-zero goal. He also indicated that, in his judgment, the climate plan under the Trudeau government was not sustainable over the long term. Carney has scrapped the consumer carbon price and agreed to weaken the trajectory of the industrial levy. All of these positions run counter to Carney’s long-held support for climate activism on behalf of governments and financial institutions, including during his leadership of the Bank of England and his establishment of a net-zero banking consortium prior to becoming Prime Minister.

Carney’s decisions come as the Alberta government is moving toward an October referendum on whether to remain in Canada or begin a process that could lead to separation—a process he views as akin to Brexit. Canada is the world’s fourth-largest oil producer, but most of its oil is currently sold to the United States.

A government report released in December 2025 showed that Canada’s best-case scenario would achieve only a 28% reduction in emissions from 2005 levels in 2030. In February, a study by the Canadian Climate Institute indicated that Canada is not on track to meet any of its climate targets — the 2026 interim emissions-reduction target to cut greenhouse gas emissions by 20% below 2005 levels, the 2030 Paris Climate Agreement commitment, and the long-term goal of net-zero emissions by 2050.

According to a recent Nanos Research Group poll, 55% of Canadians want the government to prioritize growing oil and gas exports, compared with 35% who prefer to meet its 2030 emissions target. The poll also found that 61% of Canadians support or somewhat support building a new pipeline to the northwest coast, up from 56% in December 2025.

Under the Ottawa-Alberta energy accord, Ottawa’s support for the new West Coast pipeline is contingent upon the building of a carbon capture and storage project that would offset some of the emissions impact from increased oilsands production. Carney also plans to prioritize sustainability, with Canada increasing its infrastructure through its electricity and nuclear energy strategies to double its national electrical capacity by 2050. Those strategies call for building out an interconnected grid powered by a mix of energy sources, including nuclear, hydro, oil and gas, and wind and solar.

Conclusion

Prime Minister Mark Carney and other Canadian politicians have been looking to diversify oil exports to other countries and lessen the country’s reliance on U.S. infrastructure.  It plans to build several pipelines that would increase oil exports to Asia from its west coast and eventually enable exports to Europe. Prime Minister Mark Carney recognizes that Canada’s near-term emissions-reduction goals will not be met and that it is more important for the nation to support oil and gas projects in Alberta, which holds a referendum in October that could lead to its separation from Canada. Most Canadians support the move to prioritize oil and gas over prioritizing meeting emissions targets.

The post New Oil Pipelines Being Planned by Canada to Export Alberta Oil appeared first on IER.

When gasoline prices climb, drivers everywhere start asking the same question: what’s really behind the pain at the pump? The answers are rarely simple. Shifting global oil markets, OPEC decisions, wars and sanctions disrupting supply, refinery outages, pipeline constraints, seasonal weather and demand swings can all play a role. Yet one pattern stands out clearly in the data. Gasoline is more expensive in Democratic-controlled states, and over the past five years prices have risen faster there.

In early 2026, states with unified Democratic control (the governorship plus both legislative chambers) averaged $3.69 per gallon, while unified Republican states averaged $3.14 per gallon, a gap of $0.55 per gallon. Averaged over our full 2017–2026 data window, the gap is about $0.45 per gallon.

But the headline gap is not the whole story, and a careful look at the data tells a more useful one. Most of the gap is traceable to identifiable policies and supply geography: state gasoline taxes, West Coast fuel regulations, and the region’s hostility to refineries. Those policies were built up over decades, and the recent acceleration in West Coast prices lines up with specific policy and refinery events in 2022 and 2023. This brief summarizes the findings.

Key Findings

• In 2026, gasoline is $0.55 per gallon more expensive in unified-Democratic states than in unified-Republican states ($3.69 vs. $3.14). Over 2017–2026, the gap averaged about $0.45.
• About two-thirds of the gap is explained by four measurable factors: state gasoline taxes, the West Coast refining region, California-specific fuel costs, and federal reformulated-gasoline rules. A statistically significant residual of about $0.13 per gallon remains.
• State gasoline taxes are the single largest policy lever: about 89 cents of every dollar of state gas tax shows up at the pump, and Democratic-controlled states tax fuel more heavily.
• Over the past five years, prices rose by $0.86 per gallon in Democratic states versus $0.62 in Republican states. Most of that difference comes from just four states: California, Hawaii, Washington, and Oregon. Excluding them, the gap shrinks from $0.24 to $0.09.
• The sharp widening of the West Coast price premium is recent, not geographic destiny: after accounting for taxes and other factors, the premium ran $0.20–$0.44 per gallon from 2017 to 2021, then roughly doubled in 2022 and reached $0.91 by 2026—timing that matches new carbon-pricing programs and the loss of West Coast refining capacity.
• The gap reflects decades of accumulated policy, not necessarily who holds office today. A state’s cumulative years of Democratic control since 2001 predict its 2026 prices better than its current party control does.

What the Maps Show

The geography of gasoline prices is stark. In early 2026, the most expensive states are overwhelmingly on the Pacific: California ($5.03), Hawaii ($4.86), Washington ($4.61), Oregon ($4.17), Nevada ($4.12), and Alaska ($4.02). The cheapest states form a contiguous South-Central and Plains belt: Oklahoma ($2.86), Kansas ($2.92), Arkansas ($2.96), Mississippi ($2.97), Iowa ($2.98), and Louisiana ($2.99).

Figure 1. Current gasoline prices by state, average of January–May 2026. Blue = more expensive.

Figure 2. Five-year change in gasoline prices, January–May 2021 to January–May 2026. Blue = larger increase.

Question 1: Why Is Gasoline More Expensive in Blue States?

Some of the price gap could, in principle, have nothing to do with policy: a state might be cheap because it pumps its own crude, or expensive because it sits outside the continental United States. We test those possibilities before measuring anything else, while also removing the national price cycle. Isolation matters a great deal (being in Alaska or Hawaii adds roughly $0.78 per gallon at this stage), but producing crude oil turns out to make no difference at all, a null result we return to below. With the national cycle and these endowments accounted for, the premium associated with unified Democratic control is $0.41 per gallon.

From there, we add gasoline-relevant policy factors to the model one at a time and watch how much of the $0.41 each can account for. Because these factors overlap (high-tax states also tend to be West Coast states), the individual reductions cannot simply be added together. Together, the full set explains about two-thirds of the premium:

Table 1. How the estimated Blue-state premium shrinks as policy factors are added. Middle rows add one factor at a time; factors overlap, so their individual reductions do not sum to the combined 68%.

Measured one factor at a time, each additional dollar of state gasoline tax raises pump prices by about $0.89. This is a textbook result that most of the fuel tax is passed through to drivers. Being in the West Coast refining district (PADD 5: California, Oregon, Washington, Nevada, Arizona, Alaska, and Hawaii) adds about $0.59 per gallon over the East Coast baseline; being Alaska or Hawaii, cut off from mainland supply, adds about $0.46; and California-specific factors (its unique CARB fuel blend plus, unique hostility against oil production and refining, and other California specific policies) add about $0.44. Notably, producing crude oil or hosting refineries does not, by itself, make a state’s gasoline cheaper once taxes and the refining region are accounted for.

After all of that, a residual premium of about $0.13 per gallon remains in Democratic-controlled states. It is small but statistically robust, and it likely reflects gasoline-relevant policies that the model cannot measure directly. The full model fits the data closely: it explains 95 percent of the variation in monthly state gasoline prices, up from 82 percent before the four factors in Table 1 are added.

Question 2: Why Did Blue-State Prices Rise Faster?

In the same January–May window in 2021 and 2026, gasoline prices rose in every state. But the increase was larger in Democratic states:

Table 2. Five-year change in AAA regular-grade prices, equal January–May windows. DC excluded; Nebraska’s nonpartisan legislature places it outside the party rows. Figures are rounded.

The Democratic–Republican gap in the five-year increase is about $0.24 per gallon (p = 0.005). But it is heavily concentrated: 

Table 3. Five-year dollar change in AAA regular-grade price, January–May 2021 to January–May 2026.

Exclude California, Hawaii, Washington, and Oregon, and the Blue-state increase falls to $0.71 versus $0.62 for Red states, a gap of $0.09 that is still detectable in dollar terms but no longer statistically significant when measured as a percentage. Split-control states fall cleanly in between: in the party-only regression, their five-year increase runs about $0.15 per gallon above Republican states (p = 0.04), a step-ladder ordering consistent with policy intensity rising with the degree of Democratic control.

States that started expensive in 2021 also saw the biggest dollar increases (the correlation between the 2021 price level and the five-year dollar change is 0.79). That relationship is not primarily mechanical: most of gasoline’s cost structure (crude oil and fixed excise taxes) moves in cents per gallon, not in percentages, and when prices fell in 2023, the expensive states did not fall more, as a proportional pattern would imply. A modest part of the relationship is genuinely price-scaling, because percentage-based fuel taxes and fees in about a dozen states grow with the price. Mostly, though, the starting price is a stand-in for West Coast geography and policy: the states that were already expensive are the same states whose carbon programs and supply constraints kept adding costs. Once West Coast geography is included, the starting-price coefficient falls sharply, from about +$0.68 to about +$0.23 per dollar of initial price, while the party label itself adds only about $0.08 per gallon and is only marginally significant. The faster Blue-state increase is mostly a West Coast story, not necessarily a uniform Blue-versus-Red phenomenon.

Question 3: What Changed on the West Coast?

The West Coast premium is the largest single geographic factor in the analysis, and it is often treated as a permanent feature of the region, with people arguing that the region has isolated refining, special blends, and isn’t pipeline-connected to the Gulf Coast. The data suggest something else. After our model strips out taxes, the California indicator, federal fuel rules, and Alaska/Hawaii isolation, the remaining West Coast premium was modest from 2017 through 2021, ranging from $0.20 to $0.44 per gallon. It roughly doubled to $0.67 in 2022 and climbed to $0.91 by 2026.

Figure 3. The West Coast (PADD 5) price premium over the East Coast by year, after accounting for taxes, the California indicator, federal fuel rules, and Alaska/Hawaii isolation.

First, Washington’s Climate Commitment Act (a cap-and-trade program covering motor fuels) and Clean Fuel Standard both took effect on January 1, 2023. That single, known start date gives us a cleaner before-and-after test than anything else in our data: quasi-experimental in style, though still observational. Our model includes a variable that marks when a state has a carbon program covering motor fuels; when we drop California and Oregon, the only other states that have one, the only switch left in the data is Washington’s, in January 2023. The estimated effect is then identified solely by how Washington’s prices moved on that date relative to those of the 46 states that never adopted such a program. Estimated that way, the effect is $0.41 per gallon; re-estimated, comparing Washington strictly against its own pre-2023 baseline, it is $0.48 per gallon. A simple non-model check points in the same direction: Washington’s gasoline price rose about $1.00 across the pre/post-2023 break, compared with about $0.50 nationally. That roughly $0.50 extra increase is close to the two model-based Washington estimates. Three methods, from regression to arithmetic, land within eight cents of one another. The estimate technically captures everything that changed in Washington at the start of 2023, but the two carbon programs are by far the most plausible drivers.

Second, California’s carbon costs climbed: cap-and-trade allowance prices roughly doubled between 2021 and 2023, raising the embedded carbon cost in every gallon sold there. Oregon’s Clean Fuels Program, in place since 2016, works similarly.

Third, the region lost refining capacity. Phillips 66’s Rodeo refinery (about 120,000 barrels per day) ceased crude refining in early 2024 to convert to renewable diesel, after Marathon’s Martinez refinery made the same conversion in 2022–2023. Apart from an Arizona pipeline link to the Gulf Coast, the West Coast has no major pipeline connection to the rest of the country, so lost capacity cannot easily be replaced.

These costs also do not stop at state borders. When the three carbon program states (California, Washington, and Oregon) are removed from the model entirely, the remaining West Coast premium is still about $0.52 per gallon, driven mostly by Nevada and Arizona. Neither state has a carbon program of its own, but both are largely supplied by California refineries and pipelines, so West Coast policies and supply costs propagate to neighboring states that never enacted them. The West Coast premium is real, but its sharp widening is recent and tied to identifiable policy and supply events rather than to long-standing geography.

Question 4: Is This About Who Is in Office Today?

Not necessarily. This is the most important nuance in the data. Gasoline prices reflect tax codes and fuel regulations built up over time, not the current legislative session. Democratic control fifteen years ago still significantly predicts a state’s 2026 gasoline price: states that were under unified Democratic control in 2011 average about $0.48 per gallon more in 2026 (p = 0.03), and unified control in 2016 or 2021 predicts comparable differences (+$0.65 and +$0.54, respectively). A state’s cumulative years of unified Democratic control since 2001 explain about 25 percent of today’s price differences, while current control alone explains about 20 percent. When both are put in the same model, the cumulative history carries all the predictive power essentially, while current control collapses to nothing (+$0.10, p = 0.50). In concrete terms, each additional year of unified Democratic control since 2001 is associated with about 3.6 cents per gallon in today’s prices (p = 0.003), so a state with sixteen such years carries roughly $0.57 per gallon. The tax code shows the same accumulation: states under unified Democratic control in 2021 levy total gasoline taxes about 11 cents per gallon higher than other states (p = 0.006).

Conclusion

Democratic-controlled states have higher gasoline prices, and over the past five years, prices have risen faster there. Both gaps are real. But neither is well described as only an effect of today’s party label. About two-thirds of the price-level gap traces to identifiable policy and geography: state gasoline taxes, the West Coast refining region, California-specific fuel costs, and federal fuel rules. What remains is a small but statistically significant residual of about $0.13 per gallon. The faster five-year increase is mostly concentrated in states that already had high prices because of West Coast policy and supply geography—four Pacific states whose carbon-pricing programs and refinery losses arrived together in 2022 and 2023.

The political signal in gasoline prices is real, but it is a signal of accumulated policy choices: fuel taxes, carbon taxes, and regulatory environments built over decades, rather than of who happens to hold office right now. For policymakers, that is the actionable point: the levers that explain the gap are specific and identifiable, and the largest of them, state fuel taxes and transportation carbon taxes, pass through to consumers nearly dollar for dollar.

A Note on Data and Methods

Prices are AAA regular-grade retail gasoline prices by state, collected monthly from archived web snapshots, January 2017 through June 2026 (the June 2026 value is a single-day snapshot from June 8, 2026; 2026 “current” figures are January–May averages). Political control is Ballotpedia state-trifecta data, 2001–2026; “unified” control means one party holds the governorship and both legislative chambers. Gasoline taxes are the Tax Foundation’s total state taxes and fees on gasoline. Party comparisons cover 49 states: the District of Columbia has no state government, and Nebraska’s legislature is nonpartisan. All regression estimates, robustness checks, and limitations are documented in the accompanying report, Gasoline Prices and State Political Control: Technical Companion.

The post The Pacific Premium: Why Gasoline Costs More In Democratic-Controlled States appeared first on IER.

OPEC+ Quotas

The OPEC+ announced increase in oil production was the fifth consecutive month it agreed to raise oil outputs, but it is likely a paper transaction if the Strait of Hormuz remains essentially closed. The cartel has added 940,000 barrels a day to quotas since the war began. Seven countries are participating in increasing production: Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman. The United Arab Emirates (UAE) produced oil near record highs of 3.8 million barrels per day in June after leaving OPEC and its quotas. Many Middle East oil producers cut production because their oil had no buyers during the conflict with Iran and the ensuing turmoil in the Strait of Hormuz.

Iran Oil Sales

Iran was allowed to sell its oil during the ceasefire as the United States had removed sanctions. However, it was finding it challenging to attract customers, particularly since China, its largest customer, is seeking alternatives. China’s oil imports have dropped since the war in Iran started in late February, depressing oil demand. In May, its oil imports dropped 29% from a year earlier to 7.82 million barrels per day, the lowest level since February 2018. China’s oil imports from Iran more than halved in June to about 654,000 barrels per day, down from the prior month, according to Bloomberg. China had stocked up on lower-priced oil from Venezuela, Iran, and Russia—countries whose oil was under sanctions. It built its stocks to over a billion barrels to be ready for any conflict in the Middle East. And it has been encouraging its people to buy electric vehicles rather than gasoline cars, thanks to its cheap coal-fired generators that supply over half of its electricity, supplemented by hydroelectric, wind, solar, and nuclear power.

Iran has shipped more than 40 million barrels of oil since the United States lifted its naval blockade with the ceasefire agreement. With the return to fire, the United States revoked the waiver that allowed Iran to sell its oil on the global market for 60 days, a key element of the interim deal both sides signed last month. The U.S. Treasury Department issued a general license allowing Iran to produce, sell, and deliver oil on the global market for two months during the ceasefire. The license was designed to give Iran greater access to U.S. dollars by allowing it to conduct oil transactions in U.S. dollars. It also allowed American importers to buy Iranian crude oil, petrochemical products, and petroleum products. Iran has threatened to impose tiered fees on vessels transiting the strait, either for safe passage or for services provided as ships pass through.

Stock Drawdown

During the initial weeks of the Iran conflict, the International Energy Agency coordinated the release of 400 million barrels of oil from emergency reserves to contain prices and ensure supplies. The U.S. Strategic Petroleum Reserve stockpiles dropped from 415 million barrels at the end of February to 326 million as of June 26–the lowest level since 1983. U.S. oil production rose to 13.93 million barrels per day in April, ​the highest on record.

Conclusion

Oil prices were around pre-Iran war levels as OPEC+ approved an 188,000-barrel-per-day production increase starting in August, and oil flows were moving through the Strait of Hormuz. The cartel has added 940,000 barrels a day to quotas since the war began, and the United Arab Emirates is producing near record highs, having left OPEC and its quota. Like Saudi Arabia, the UAE has a pipeline that avoids the strait. Oil prices, however, jumped due to Iran attacking three ships in the strait and both sides resuming strikes.

China reduced its oil imports during the Iran conflict, and its oil imports from Iran more than halved in June compared with the prior month, which could become challenging for Iran to dispose of its oil as China is its biggest customer. Iran may be looking to supplement its oil revenues by imposing transit fees through the Strait of Hormuz, particularly after the United States revoked its waiver allowing it to sell oil on the global market following the recent strikes.

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