Sustainable Aviation Fuel Can Help Lower Fuel Prices in California

New research shows how sustainable aviation fuel (SAF) improves gasoline supply, reduces volatility, and strengthens California’s fuel system.

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New Study: The Overlooked Link Between Sustainable Aviation and Gasoline Prices

California’s fuel system faces growing challenges: declining refinery capacity, increasing reliance on imports, and frequent price spikes.

A new study from the Baker Institute for Public Policy highlights a critical but overlooked solution. Expanding sustainable aviation fuel (SAF) production can strengthen gasoline supply and help stabilize fuel prices across the state.

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  • 4–6% increase in gasoline supply from in-state SAF production

  • 22–40 cents per gallon reduction in gasoline production costs

  • Reduced reliance on expensive fuel imports

  • Lower price volatility during refinery outages and supply disruptions

How Sustainable Aviation Fuel Improves Gasoline Supply

1. Expands Supply: SAF production creates renewable naphtha, which can be blended into gasoline, directly increasing available supply.

2. Optimizes Refineries: With SAF supplementing jet fuel demand, refineries can shift operations to produce more gasoline.

3. Improves Logistics: Reducing jet fuel imports frees up infrastructure to bring in more gasoline when supply is tight.

Why This Matters for Fuel Prices

California operates as an “energy island,” making it vulnerable to supply disruptions and global market shifts. By increasing flexibility across the fuel system, sustainable aviation fuel helps:

  • Reduce dependence on imports

  • Improve supply resilience

  • Lower the risk of price spikes

  • Support more stable, predictable fuel prices

About the Author

Harold “Skip” York, PhD, Nonresident Fellow, Baker Institute for Public Policy at Rice University

Dr. York is a leading expert in global energy markets, refining, and fuel systems. His research focuses on the intersection of energy supply, infrastructure, and market dynamics, with a particular emphasis on how policy and technology shape fuel availability and pricing.

This study explores the relationship between sustainable aviation fuel, gasoline supply, and fuel prices in California. It provides data-driven insights into how SAF production can improve energy resilience, reduce volatility, and support a more stable fuel market.

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Frequently Asked Questions

  • Sustainable aviation fuel (SAF) is an alternative jet fuel made from renewable sources such as used cooking oil, agricultural waste, and other feedstocks. It is designed to reduce emissions while working within existing aircraft and fuel infrastructure.

  • A new study finds that increasing SAF production can help lower fuel prices by expanding gasoline supply, reducing reliance on imports, and improving overall system efficiency in California.

  • SAF production could increase California’s gasoline supply by 4% to 6%, which is significant in a tight fuel market where small changes in supply can impact prices.

  • Yes. The study estimates that increased SAF production could reduce gasoline production costs by 22 to 40 cents per gallon, largely by reducing the need for higher-cost imports.

  • California operates as an “energy island,” with limited pipeline connections and a heavy reliance on imports. This makes the state more vulnerable to refinery outages, global supply disruptions, and sudden price spikes.

  • SAF adds an alternative supply of jet fuel, allowing refineries to produce more gasoline and maintain better supply balance. This increases system flexibility and reduces the severity of price spikes during disruptions.