U.S. Crude Supply & California’s Gas Tax Impact

Newsletter No. 172

Good afternoon,

This week’s energy headlines point to a market being shaped by two major forces: affordability at the pump and rapidly growing demand for reliable power. U.S. crude inventories posted another sizable draw, keeping stockpiles below the five-year average, while California’s latest gas tax increase shows how state policy can continue to pressure consumers even when fuel prices are easing. At the same time, AI, data centers and industrial growth are driving a new wave of investment in natural gas-fired power generation.

In this week’s issue of The Upside, I’m covering several key stories shaping the market, including the latest EIA crude inventory draw, California’s rising gasoline tax burden, the growing demand for coal and natural gas power as electricity needs accelerate, and Liberty Energy’s strategy to build a major power generation business alongside its oilfield services platform. I’ll also share what’s happening at King, feature a new episode of The Jay Young Show, and include this month’s Ask the “Tax Guy” discussion.

This Week's Headlines

Oil and Gas News

U.S. Crude Inventories Fall as Demand Holds Firm
U.S. crude inventories fell by 3.8 million barrels for the week ending June 26, bringing commercial stockpiles to 408.4 million barrels, now 7% below the five-year average, according to the EIA. The draw was smaller than the API’s reported 6.1 million barrel decline but still signals continued tightness in crude supply.

U.S. Power Spending Surges on Data Center Demand
U.S. companies are expected to spend about $50 billion on coal and natural gas power generation this year as electricity demand accelerates, according to the International Energy Agency. The increase would mark the first time in decades that U.S. investment in coal and gas generation exceeds China’s, with U.S. spending projected to be $3 billion higher.

The surge is being driven largely by rising demand for gas turbines as data centers expand and require reliable baseload power. U.S. companies reportedly ordered about 20 GW of gas turbine capacity in the first quarter alone, while tight turbine supply has pushed prices sharply higher.

California Gas Tax Increase Adds to Driver Costs
California’s gasoline excise tax will rise by 2.2 cents on July 1, bringing the state tax to 63.4 cents per gallon. The increase is automatic under Senate Bill 1, the 2017 law that ties annual gas tax adjustments to inflation.

Some are arguing that California drivers face the highest fuel tax and regulatory burden in the country when the state excise tax is combined with sales taxes, cap-and-trade costs, Low Carbon Fuel Standard costs, underground storage tank fees and the federal gas tax. Together, those added costs can significantly increase what drivers pay at the pump.

AAA gas prices. (Photo: AAA, June 25, 2026)

Happening at King

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Featured on Newsmax

In a recent interview with Newsmax, I joined the conversation on oil prices, gasoline costs, market delays and the political debate around energy prices.