By KEVIN WALKER Michigan Correspondent
CHICAGO, Ill. — Gas prices remained high at pumps throughout the Midwest and Great Plains last week as oil giant BP performed unscheduled maintenance at its refinery in Whiting, Ind. According to the gas information website GasBuddy.com the largest effect of an unscheduled maintenance incident occurs closest to the refinery. Since Chicago is so close to Whiting, it experienced a big price spike. The Midwest is really the epicenter for the biggest increases, but to some extent they are happening elsewhere, like the Great Plains, said Patrick DeHaan, senior petroleum analyst at GasBuddy.com When there is scheduled maintenance at a refinery it will tend to cause gas prices to go up as well, DeHaan said; however, when there’s a problem at a refinery, it makes any concerns about scheduled maintenance at other refineries even greater. Marathon’s Robinson, Ill., refinery, for example, has been undergoing extended repairs. Oil companies might react to an unscheduled maintenance incident by putting off scheduled maintenance, however. DeHaan said he heard Phillips 66 is considering putting off scheduled maintenance at one of its refineries. The outage at the Whiting refinery happened on Aug. 8. Gas prices throughout the Midwest began to spike on Aug. 11. In Gary, Ind., the average price went from $2.46 a gallon on Aug. 11 to nearly $3.19 on Aug. 15. In Chicago, the average gas price on Aug. 11 was about $2.75. By Aug. 18 the price had ballooned to $3.48. In Columbus, Ohio, the average price jumped from $2.38 to $2.89 between Aug. 11-14. In Detroit the price went from $2.50 to $3.03 between Aug. 11-15. Lexington, Ky., saw a similar price spike. Tennessee appears to have been unaffected by the outage. By Aug. 20 prices appeared to go down a little. “It’s hard to gauge how long the spikes will last,” DeHaan said. “It’s all subject to change, depending on what happens. BP could come out and say one day that it’s going to take a year to resolve its refinery problems and if they did, the market would probably panic all over again.” He explained gasoline is traded on an exchange as a commodity, just like oil. According to an analysis from the U.S. Energy Information Administration (EIA) dated Aug. 18, it can take days or weeks for the market to adjust to the sudden loss of production during unplanned outages, often resulting in sudden price increases. The severity and duration of the higher prices depend on how quickly the refinery problem can be resolved, how soon alternative sources of supply can arrive and the cost to bring that supply to the region. BP issued a brief statement about the outage on Aug. 12. It stated the largest of the three crude distillation units at the Whiting refinery in Indiana shut down on Aug. 8 for unscheduled repair work. “The shutdown was executed without incident and according to protocols,” the statement said. “While the rest of the refinery continues to operate safely, the outage has reduced production. BP is working to safely restart the unit as soon as possible. In the meantime, the company is working to meet its fuel obligations.” Last week BP spokesman Brett Clanton added the company is meeting all of its contractual obligations, but didn’t provide any information on when repairs might be completed. He said that the outage was due to a “malfunction” and that the refinery is producing fuel safely, but at lower-than-normal volumes. According to the EIA analysis, the shutdown at the refinery resulted in a loss of 50 percent of its capacity and might have been caused by leaking pipes. |
