As Costco’s gas expansion is blocked in court, hundreds of small stations shut down and major refineries exit California, shrinking fuel supply and driving fears of soaring gas prices and fuel deserts—leaving drivers frustrated, anxious, and paying the price for a system unraveling in real time.

California’s fuel infrastructure is entering one of its most unstable periods in decades as legal battles, regulatory pressure, and refinery exits converge to shrink supply, push prices higher, and raise alarms of widespread “fuel deserts” across the state.

What state leaders once described as a managed transition is now being openly called a looming gas crisis by industry insiders, local station owners, and regional officials.

The latest flashpoint centers on Costco’s ambitious plan to expand large-scale gas stations across California, a move that supporters said would increase competition and lower prices.

Instead, multiple projects have been stalled or blocked in court following lawsuits from local groups and competing interests, citing environmental reviews, traffic concerns, and zoning disputes.

The legal delays have frozen construction timelines indefinitely, leaving what was billed as a major relief valve for consumers stuck in limbo.

At the same time, California’s smaller, independently owned gas stations are disappearing at an accelerating pace.

Nearly 500 mom-and-pop stations are expected to shut down under new state regulations that tighten underground storage standards, monitoring requirements, and compliance costs.

For many small operators, upgrading aging infrastructure would require millions of dollars they simply do not have.

“We’re not fighting clean air,” said one longtime station owner in the Central Valley, standing beside pumps scheduled to be removed by year’s end.

“We’re fighting rules that assume everyone has corporate money.

We don’t.”

The squeeze has been compounded by decisions from major refiners to scale back or exit California altogether.

In recent months, Phillips 66 and Valero have announced plans to shut down or convert key refining operations in the state, citing high regulatory costs, uncertain long-term demand, and mounting legal exposure.

Together, their departures represent nearly 20 percent of California’s refining capacity disappearing in a matter of months.

Energy analysts warn that California’s fuel system is uniquely vulnerable because of its isolation.

The state relies on specialized fuel blends that cannot easily be imported from other regions, meaning lost in-state refining capacity cannot be quickly replaced.

“You can’t just truck in gasoline from Texas and flip a switch,” one analyst explained.

“The system doesn’t work that way.”

The consequences are already visible.

Gas prices across California have risen faster than the national average, with some stations reporting sharp week-to-week jumps.

In rural areas and lower-income neighborhoods, entire communities are losing their last nearby gas station, forcing residents to drive long distances just to refuel.

State officials privately acknowledge the emergence of fuel deserts, particularly in inland counties.

Public warnings have grown increasingly dire.

Industry groups and regional planners have cautioned that if current trends continue, California drivers could face average prices ranging from $7 to as high as $12 per gallon during future supply shocks, refinery outages, or peak demand periods.

While state leaders dispute the upper-end estimates, they concede that volatility is increasing.

Governor Gavin Newsom’s administration has defended the regulatory framework, arguing that environmental protections and climate goals cannot be compromised and that oil companies are choosing profits over responsibility.

A spokesperson said the state is “actively working on solutions to ensure fuel reliability while accelerating the transition to cleaner energy.”

Critics counter that the transition is moving faster than the infrastructure can handle.

Lawmakers from both parties have questioned why large-scale alternatives like Costco’s stations are tied up in court while small operators are regulated out of existence and major refiners walk away.

“We’re closing supply before demand has gone anywhere,” one legislator said.

“That’s not a transition.

That’s a squeeze.”

For drivers, the debate feels increasingly detached from reality.

Ride-share drivers report shrinking margins.

Delivery companies are adding fuel surcharges.

Construction firms warn of higher project costs.

And commuters, watching prices climb, are left wondering how much worse it can get.

What makes the situation especially volatile is timing.

The refinery exits, station closures, and blocked expansion projects are all happening simultaneously, leaving little room for the system to absorb shocks.

Any unplanned outage, natural disaster, or surge in demand could tip localized shortages into a statewide problem.

As court battles drag on and regulatory deadlines approach, California’s fuel system stands at a crossroads.

Whether leaders can stabilize supply while pursuing long-term climate goals remains uncertain.

What is clear is that the cost of miscalculation will not be paid in policy papers or press statements—but at the pump, by millions of drivers watching the numbers climb and wondering when relief will arrive.