Motorists in Midwest to see temporary spike in gas prices

Wednesday, October 7, 2015

CHICAGO -- Motorists may be doing a double take at the pump in the next week as gasoline prices in the Midwest begin to spike as refiners shut down for maintenance or unplanned repairs, crimping gasoline supply.

"If I was paid every time I mentioned a refinery issue, I could have retired years ago," said Patrick DeHaan, senior petroleum analyst for GasBuddy.com. "The fact of the matter is the nation's refineries aren't getting any younger. With falling gasoline demand, refiners tend to use these situations to perform maintenance. In some cases they've been working on resolving unplanned issues. Currently some of the region's largest contributors to gasoline supply are seeing some of their capacity temporarily reduced as they carry out this work."

Statistics from the Energy Information Administration (EIA) show that Midwest refiners used just 87.0% of their capacity in the most recent week, down over 10% from early September, when they utilized 98.3% of their capacity. Twelve refiners in the region are currently undergoing work: three in Illinois and Ohio, two in Minnesota, and one in Indiana, Kansas, Oklahoma and Kentucky. The work varies in scope at each refinery and may last several weeks or longer.

A gain in crude oil prices to this week is adding insult to injury and a combination of higher oil prices and reduced gasoline output due to the aforementioned issues will lead retail gasoline prices to rise as much as 10-30 cents per gallon over the next week in a handful of states: North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Minnesota, Iowa, Missouri, Wisconsin, Illinois, Michigan, Indiana, Ohio and Kentucky.

While the pain at the pump may stick around for a few weeks, gasoline prices will still remain far below their summer peak price. It is widely expected that over the next several weeks, refiners will finish seasonal planned work and resolve unplanned shutdowns as well, which will then lead to prices falling as we near Thanksgiving.

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