Business
How the spike in gas prices is jolting California’s giant economy
With crude oil topping $100 a barrel, and the average price of gas in the state approaching $5.50 a gallon, every touch of the nozzle is painful for California drivers.
Now, with the Iran war nearing its third week, the soaring costs of energy are rippling through the world’s fourth-largest economy.
While economists say it‘s too early to gauge the long-term impacts on the state, one thing is clear: The higher cost to fill gas tanks is eating into Californians’ disposable incomes — what’s spent to buy food and other necessities, or to go out and have fun — while reducing the income of businesses, also facing higher fuel costs.
“Inflation and affordability have been a big concern for the American public, and the longer this goes on, the greater risk there is of increasing overall inflation,” said Trevor Higgins, senior vice president for energy and the environment at the Center for American Progress. The group released a report this week documenting the inflationary impacts of the war and past conflicts.
The price of a gallon of gas hit $5.37 on Thursday, up 82 cents from a month ago, according to AAA. The state consistently has the highest prices in the nation due to taxes, clean air rules and supply constraints.
Before the start of the war, the California economy seemed poised for strong growth despite a lagging jobs market that has seen multiple employers — including several major tech companies such as Google, Block and Autodesk — slash payrolls by the thousands.
The state’s economy grew at a robust 3.8% annualized rate in the fourth quarter, driven by artificial intelligence investment, the burgeoning aerospace industry and other high-productivity sectors, according to the UCLA Anderson Forecast released early this month.
The report predicted a possible pickup in employment this year, but any prolonged conflict in the Middle East means all bets are off.
The $4.1-trillion state economy is highly diverse, with large logistics, manufacturing and agriculture industries, just to name a few sectors having to absorb higher fuel costs — though defense contractors could well benefit from the war.
Just as the state’s more than 25 million registered drivers are experiencing pain at the pump, the rising cost of diesel fuel is hitting Southern California’s large logistics industry, including truckers reliant on diesel fuel.
The average price of a gallon of diesel was up to $6.21 on Thursday, up $1.17 from a month earlier.
The twin ports of Los Angeles and Long Beach are the epicenter of the region’s logistics industry, supporting more than 200,000 jobs and contributing $28 billion to the regional economy in 2022. Some 9,000 truckers visit the ports at least once weekly.
“Diesel fuels all supply chains, and so it will affect the truckers who are servicing the ports immediately. This is going to upset a lot of business plans,” said economist Jock O’Connell, international trade advisor at L.A.’s Beacon Economics.
“There’s every hope that it will be wrapped up within a few weeks at most and will return to normal. But for the time being, there’s going to be a war tax imposed on the entire transportation system of the United States,” he said.
The war also has doubled the costs of bunker fuel that powers ships calling on the local ports with goods from Asia, said Ronald Widdows, chief executive of FlexiVan, a chassis supplier for the logistics industry, during a Port of Los Angeles media briefing Thursday.
That is adding $2 million to the costs of every round trip, which is passed on to the importers here in the United States, he said. Importers include big U.S. toy, apparel and other retailers that can pass on the costs to consumers.
It’s also expected that the disruption in Middle East shipping lanes could slow goods bound for Southern California as they back up in Southeast Asian ports — though for now it’s expected to be minimal, Widdows said.
“That will have some knock-on effect on cargo volume if this goes on for very much longer,” he said.
The state’s $61-billion agricultural industry, the largest in the nation, is highly sensitive to diesel costs too.
“The agricultural industry here in California, as well as the rest of the country, uses a lot of diesel. There’s lots of big equipment, whether it’s an almond harvester or some big tractor in a rice field,” said Daniel Sumner, a professor of agriculture at UC Davis.
While diesel costs are already affecting farmers, another threat on the horizon is higher fertilizer costs due to the rising costs of natural gas, a key feedstock in making it, he said.
Sumner noted the new challenges arrive as the industry is still grappling with President Trump’s tariffs, which — though a majority have been struck down by the Supreme Court — prompted retaliatory actions by longtime trading partners.
The surge in fuel prices comes as the state is experiencing what the Anderson report called a “bifurcated” state economy, with the tech and aerospace industries making up for the lagging construction, retail and segments of the leisure and hospitality industries.
Also lagging has been the kind of hiring expected from a growing economy, exacerbated by thousands of job cuts in Silicon Valley, which firms say have been prompted by artificial intelligence investment and disruption.
Hollywood studios have also laid off thousands because of a slowdown in filming, with the recent Paramount-Warner Bros. Discovery deal stirring fears of more.
Just last week, Oakland fintech Block, the parent of Cash App and payment services company Square, cut more than 4,000 workers citing AI.
The national jobs picture isn’t much better. Last week, the Labor Department reported that employers cut 92,000 jobs in February, a month economists had expected would see a 60,000 gain. The unemployment rate rose to 4.4%.
California’s unemployment rate was 5.5% in December, the most recent available data. That is the highest in the nation, but down a tenth of a point since November.
Michael Bernick, a former director of California’s Employment Development Department, said that although it has been too soon for the war to affect employment, the inflationary pressures brought by higher fuel costs don’t help.
“California’s job market today is among the most competitive and difficult job markets to find a job in that I’ve seen in over 47 years in the field. So it is not like the California economy is in good position in any case,” he said.
As with any war, though, there’s money to be made, and particularly by the defense industry — a sector of the economy in which California holds an advantage over much of the rest of the nation.
Although multiple legacy defense contractors have moved their headquarters out of the state, it retains significant operations of companies such as Boeing, Lockheed Martin, Northrop Grumman and RTX, formerly Raytheon.
Some defense stocks have surged since the start of the war, while the broader Standard & Poor’s 500 index is down about 3%, including a 1.5% drop on Thursday following threats from Iran’s new leader.
Southern California also has seen a resurgence of the industry in recent years, with dozens of aerospace, defense tech and weapons startups planting their headquarters here.
Among them is Anduril Industries, a Costa Mesa startup that builds drone and other autonomous weapons and last year received a $2.5-billion funding round.
Economist Jim Doti, a professor at Chapman University in Orange, said that despite the negative effects of rising fuel costs and inflation, the state economy should benefit from the war.
“The major reason is that one of the most expensive aspects of the war is the use of missiles that are largely produced in California,” he said. “When you look at the macro impact of a war, generally, wars have positive effects on the economy.”
The university forecast in December that the nation’s real gross domestic product would grow 2% this year — a figure that it is now being revised to 2.2%. That is due to the stimulus effect of an expected $100 billion in additional government spending.
How the war affects the overall state and national economies remains to be seen, with economists not in agreement.
This week, the government reported that inflation rose 0.3% in February, and 2.4% over the last 12 months, higher than the Federal Reserve’s 2% target rate. That lessens the likelihood the central bank will cut interest rates and, coupled with the recent jobs report, raises the prospect of “stagflation” — weak growth and higher inflation.
Oxford Economics this week stayed with its 2.8% growth projection for the U.S. GDP.
The forecast noted that higher energy prices will push up inflation that will weigh on disposable incomes, but that would be offset by larger tax refunds due to Trump’s tax-and-spending bill passed last year.
O’Connell, the trade economist, said California’s defense industry will benefit “to the extent we’ve managed to shoot off a large part of our inventory of our arsenal, and we’ll need to replenish that.”
But, he added, “It’s a narrowly focused benefit.”
Business
Snap CEO Evan Spiegel and Miranda Kerr help erase $550 million in medical debt for Californians
Snap Chief Executive Evan Spiegel and his wife, supermodel Miranda Kerr, have helped pay off $550 million in medical debt for more than 261,000 Californians.
The couple made a multimillion-dollar donation to Undue Medical Debt, a nonprofit that provides debt relief to people in financial need. The organization acquires medical debt in bulk from hospitals, physician groups, collection agencies and other groups for a fraction of the cost.
“When someone you love is sick. All you want to do is focus on helping them get better,” Kerr said in a video with Spiegel. “That’s why we wanted to support this effort and help relieve medical debt, so families can focus on caring for their loved ones and really supporting their healing.”
The couple and the nonprofit didn’t disclose the exact amount of the donation, but a small gift can go a long way. Every $10 donated to Undue Medical Debt relieves an average of $1,000 in medical debt.
The gift comes as Americans struggle with the medical debt and rising cost of living. California is one of the most expensive states to live in because of soaring housing costs and energy prices. Concerns about wealth inequality have sparked heated political debates about how much billionaires should contribute.
In the United States, 1 in 4 adults are in medical debt, said Undue Medical Debt President and Chief Executive Allison Sesso in a statement.
“It’s a growing crisis undermining healthcare access, economic wellbeing and mental health and we’re so grateful that Evan Spiegel and Miranda Kerr share our belief that no one should go bankrupt because of a cancer diagnosis and no family should have to choose between insulin and groceries,” she said.
Californians whose medical debt have been paid off will start receiving a letter in mid-July from Undue Medical Debt informing them of the debt relief. Individuals can’t request debt relief because the nonprofit acquires bundled debt for thousands of people at once. Those who qualify for debt relief either earn at or below 400% of the federal poverty level or have medical debt that is more than 5% of their income, the nonprofit says on its website.
San Diego County residents benefited the most from the donation with total medical debt relief through the couple’s gift totaling roughly $99 million and affecting 40,369 people. In Los Angeles County, the gift provided $26.7 million in medical debt relief to 17,466 people, according to the nonprofit.
Spiegel, whose net worth is roughly $2 billion, and Kerr have helped relieve debt for others in the past. In 2022, the couple paid off the student loans for the Otis College of Art and Design’s graduating class.
In 2025, Spiegel was among business leaders and philanthropists who helped form the Department of Angels, a group that aims to help L.A.’s fire recovery efforts. The California Community Foundation, Snap, Spiegel and Snapchat co-founder Bobby Murphy committed $10 million to help start that group.
Roughly 200,000 people lost their homes in the January 2025 Los Angeles County wildfires. Spiegel, who grew up in Pacific Palisades and lost his childhood home in the fires, donated $5 million in immediate aid with Snap and Murphy that month.
He said in a statement that California has given so much to him and his family and that he cares “deeply about the wellbeing of our communities.”
“At a time when many families are already facing rising costs across nearly every aspect of daily life, an unexpected medical bill can create financial stress that lasts for years,” Spiegel said.
Undue Medical Debt said it’s abolished more than $40 billion of medical debt in all 50 states.
The electric vehicle company Slate Auto set out in 2022 to make the most affordable electric truck in the country. This week, it unveiled the price tag: $24,950.
At a time when demand for new electric vehicles is cooling and cars are getting harder to afford, Slate’s customizable truck could bring a fresh wave of excitement to the industry.
Deliveries will begin later this year and accelerate in 2027, the company said. Slate’s vehicle is built around a simple concept — pay only for what you actually want.
Buyers will start with a basic truck without power windows or even paint and can then customize it however they like. They can tailor-make their “blank slate” by paying extra for smart phone-compatible screens, speakers, colored wrap or paint. A $5,000 kit even converts the truck into an SUV.
Slate’s design team is based in Los Angeles County and recently moved into a new space in Carson, which employs about 50 workers. The company’s headquarters are in Troy, Mich., and its vehicles will be produced in Warsaw, Ind.
Squeezing out as much cost as possible while making it as easy as Legos to snap on different options has required complex engineering, which is why the company decided to set up its design studio in Southern California. The region is full of experts.
“Slate has done something smart,” said auto industry analyst Brian Moody. “Their EV isn’t only about price, there’s also a strong personalization element. In Southern California, the boxy, retro look will earn it a lot of attention.”
Slate is an EV startup that makes electric trucks and SUVs. Customers buy only the features they want. Photographed on Friday, Dec. 19, 2025. (Myung J. Chun/Los Angeles Times)
The company is building a marketplace of accessories for customers to choose from, including 54 basic wraps that cost less than $500 each. In contrast, a paint job on a car can cost thousands of dollars. The marketplace also offers roof stacks, zip-on seat covers and stereos.
For just under $30,000 total, customers can get a basic SUV in a fastback or squareback style. Whether it’s configured as a truck or SUV, the EV will have an estimated range of 205 miles and will be compatible with Tesla chargers.
“This is the first time in automotive history that consumers are going to get to choose,” said Slate Chief Executive Peter Faricy, who joined the company in March after 13 years with Amazon.
“It started with design, then engineering, and eventually manufacturing, and we figured out innovations in all three of those phases that make the vehicle less expensive,” he said.
For example, Slate vehicles were designed from the beginning to be wrapped instead of painted. The company will offer more than 100 colors of wrap at its launch, or customers can choose a custom color.
Slate did not disclose financial information or how much the vehicles cost to produce. However, Faricy said the company will generate a positive gross margin on its vehicles, meaning they are selling for more than what they cost to make.
“Whether Slate succeeds or fails, it has already influenced the conversation … forcing the industry to ask why affordable vehicles have become so rare,” said Jesse Toprak, an industry analyst and founder of OptiCar.ai. “They are betting on making higher profit margins on the accessories and do-it-yourself angle.”
Slate says it has already received more than 180,000 reservations. The earlier a customer placed their reservation, the sooner they’ll get their vehicle. Pre-orders opened Wednesday for $300, or $250 if the customer has already paid a $50 reservation fee.
Despite the hype, Slate is still a startup that has yet to prove itself in the market. The company has about 750 employees and has raised more than $700 million from Amazon’s Jeff Bezos and others.
“For the vehicle itself, the concept is brilliant,” Toprak said. “I think the execution risk is enormous.”
The EV industry has been under fire from the Trump administration, which has removed incentives for ownership and clean-car goals. Major automakers including Ford and Stellantis have pared back their EV offerings, and other startups have struggled to turn a profit.
The Irvine-based EV company Rivian, which hasn’t reached profitability since its founding in 2009, recently laid off hundreds of workers. It launched its highly anticipated R2 SUV earlier this month, which will eventually be available for less than $45,000.
Lucid, the luxury electric vehicle maker based in Newark, Calif., announced this week that it’s reducing its workforce by 18%. The cuts come just months after it laid off 319 Bay Area employees in February.
Faricy, Slate’s chief executive, said the company’s vehicle will appeal to a wide range of customers.
“There will be a lot of people that are attracted to the affordability but have never had an EV before,” he said.
According to Cox Automotive, the average transaction price for a new EV in the U.S. is $55,000, compared with $49,000 for a gas-powered vehicle.
“The EV market at this point doesn’t have a technology problem anymore,” Toprak said. “It has an affordability problem. Slate is one of the first companies built entirely around solving that.”
Sony Pictures will invest $100 million and take a minority stake in virtual reality venue operator Cosm, as the studio continues to build a business in communal experiences.
As part of the investment, Sony Pictures Chief Executive Ravi Ahuja will also join Cosm’s board of directors, the studio said Wednesday. The size of Sony’s minority stake was not disclosed.
The El Segundo-based Cosm currently operates three venues — one at Hollywood Park in Inglewood, and the others in Dallas and Atlanta. The company plans to open additional venues in Detroit and Cleveland.
Cosm bills itself as a “shared reality venue,” and its facilities center around a massive, wraparound screen that is intended to envelop viewers with additional digital effects. The company has largely focused on sports, though it has also shown Cirque du Soleil shows and done several collaborations with Warner Bros., including recent screenings of 2001’s “Harry Potter and the Sorcerer’s Stone” in honor of the film’s 25th anniversary.
“Cosm sits at the intersection of several trends shaping the future of entertainment,” Ahuja said in a statement. “We’ve followed Cosm since before launch and have been impressed with the quality of the experience and the enthusiasm it’s generating with audiences.”
The investment is Sony’s latest venture into experiential entertainment. In 2024, the Culver City-based studio acquired dine-in theater chain Alamo Drafthouse Cinema.
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