Great Lakes Gas Prices Expected to Rise on Unplanned Refining Issue
Posted in: Gas Prices, by Will Speer on Aug 11, 2015 11:54 AM
As if refining sector health was a big game of roulette, it appears the ball has landed on the Great Lakes area. It was reported that on Saturday, the BP refinery in Whiting, Indiana had to shut a 240,000 barrel per day crude distillation unit (CDU) down for unplanned and unexpected repairs. The refinery’s capacity is listed at 430,000 barrels per day. The refinery outage, now running at 44% of capacity, is bad news for motorists in the area. The unplanned outage will surely halt the falling gas price celebration that Illinois and Indiana have enjoyed since early July. Prices are likely to spike in Illinois, Michigan, Indiana, Ohio, Wisconsin, and increases could possibly spill over into Kentucky and Missouri during the next week.
The BP Whiting refinery is located 20 miles southeast of downtown Chicago. The unit in question had been part of BP’s refinery expansion project, opening July 1, 2013. The new unit helped allow BP to take advantage of the new Canadian oil arriving into the market. It marked the largest private sector investment in Indiana history with the expansion price-tag clocking in at the multi-billion dollar level, according to a press release from BP.
It had been a rough week for the BP Whiting refinery already. Earlier last week the alkylation unit was reported to being having issues, per a report from OPIS. The alkylation refining unit is responsible for boosting octane in gasoline. With refiners not out of the woods yet for summer gasoline season, the impact to the gasoline market is expected to be particularly tough.
BP Whiting doesn’t have the only reported issue. Phillips 66 Wood River near the St Louis area was also rumored to have ongoing maintenance. A Marathon refinery in Robinson, IL had planned maintenance this week on a hydrocracker, reformer, and potentially a CDU. If Marathon has no ability to push this maintenance back, it could further strain gasoline prices as the market waits a reported 7-10 days for the BP Whiting CDU to return.
Wholesale gasoline prices are spiking again today in the region. As retail gasoline prices were expected to fall through year-end, this latest refinery issue is sure to negatively impact local prices and temporarily delay the decline in gasoline prices