Gas prices this week continued to climb in the Great Lakes states as the fallout from a refinery outage in northwest Indiana continued, forcing more motorists to pay more than $3 per gallon at the pump. The impact of the reduced gasoline production was greatest in the areas closest to the BP refinery in Whiting, Ind., which is 20 miles southeast of Chicago. BP shut down the largest of three crude-oil distillation units at the refinery on Aug. 8 for what the company described only as "unscheduled repair work."
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The statewide average for regular gas rose 14 cents a gallon the past week in Michigan to $2.95 and 26 cents a gallon in Indiana to $2.90, according to the AAA Daily Fuel Gauge Report. Average prices have jumped 41 cents the past two weeks in Michigan and 48 cents in Indiana. Illinois was hit even harder, with prices rising 35 cents the past week and 54 cents over two weeks to a statewide average of $3.13 a gallon. In the Chicago area, the average price for regular gas was $3.43; in the city of Chicago, where taxes are higher, regular was going for $3.66 and premium for $4.23.
The Whiting refinery is BP's largest in the U.S. and supplies gasoline to other brands in several states in addition to its own, so the impact of the reduced production has gone far beyond BP stations in the immediate area. The company has not said what caused the outage or when it expects to resume full production, and that lack of clarity prompted two Indiana congressman to demand this week that BP provide more information. Reps. Fred Upton, chairman of the House Energy and Commerce Committee, and Jackie Walorski, whose district includes the refinery, requested in a letter that BP respond by Friday.
As motorists in Great Lakes states dug deeper to fill their tanks, gas prices continued to decline in most other parts of the country, assisted by low oil prices and enough supply to cover demand during the peak of the summer driving season. The national average for regular gas has fallen 2 cents a gallon since Monday to $2.65 after rising for several days because of price spikes caused by the BP refinery outage.
Diesel fuel has been unaffected by recent refinery issues, and AAA said the national average for diesel is cheaper than gas for the first time since July 2009. As of Thursday morning the average price for diesel was $2.64 a gallon. (Prices fluctuate throughout the day and could change.) AAA spokesman Michael Green said diesel prices are at a typical low point because demand for driving does not increase during the summer. During the winter, however, some of the oil used for diesel is diverted to make heating fuel, and that leads to higher pump prices. Conversely, demand for gasoline is highest during the summer, when prices are also typically higher because summer gas blends are more expensive to produce.
"Refinery problems and record demand this summer have kept gas prices higher than what we would normally expect," Green said in an email. "If refineries were running smoothly and demand was similar to recent years, then the national average price of gas should be close to $2 per gallon. Gas prices have not dropped the way one would expect this summer given that crude oil is at the lowest levels since 2009.
"Drivers of diesel vehicles are experiencing relief now, but it is unlikely to last. Gas prices should drop this autumn as people drive less, and diesel will likely jump heading into winter due to normal seasonal factors. By January the spread between gasoline and diesel could be more than 50 cents per gallon."
Gas prices continued to fall in the Western U.S., which earlier this summer experienced price spikes caused by refinery issues similar to those going on now in the Great Lakes states. California still had the highest average price for regular gas, $3.54, but that was 5 cents lower than a week ago and 32 cents less than a month ago. Alaska, at $3.46, was next highest, followed by Nevada, $3.20. Hawaii, Illinois and Washington also averaged more than $3. The cheapest gas could be found in South Carolina, where the average price fell 2 cents the past week to $2.16, followed by Alabama, $2.21 and Mississippi, $2.23.
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