Jack Laser looked dejected as he squeezed the handle on the $3.39-a-gallon gasoline nozzle at a filling station near Chicago’s Eisenhower expressway.
“The price had just dropped to $2.80,” Laser said as he gassed up his black Dodge Durango on a warm, sunny afternoon. “I just put $60 in here and it probably won’t even get me a half a tank.”
Laser and millions of others in the Midwest have seen prices at the pump surge by almost 50 cents this week after an equipment failure at a BP Plc oil refinery on the southern shore of Lake Michigan crimped fuel supplies with just weeks left in the summer driving season.
The average retail price in the Chicago area jumped 21.6 cents a gallon on Friday to $3.226, according to AAA, the nation’s largest motoring group. The organization has heard from multiple filling stations that have raised prices 60-80 cents in a day. In Detroit, prices jumped 15.4 cents to $2.99.
The gasoline spike is coming even as crude oil fell to the lowest level in more than six years yesterday amid a global supply glut.
“I heard on the news a few days ago that the crude oil is going down, but I get to the station and the price is going up,” Victor Etuk, a 45-year-old taxi driver for Chicago Carriage Cab Co. said as he filled up for $3.39 a gallon at a Shell station near downtown Chicago. “I’m like, ‘Didn’t I hear prices should be falling?’”
BP’s Whiting refinery in Indiana, the largest in the Midwest accounting for about 11 percent of all fuel production in the region, is operating at minimum rates after it shut its largest crude unit for at least a month to make repairs on leaking heat exchanger tubes, according to a person familiar with the work.
“The BP refinery is so large, it supplies much of the gasoline in the Great Lakes,” Michael Green, a spokesman for AAA in Washington, D.C., said by phone. “Any problems there have ripple effects to much of the Eastern half of the U.S.”
Prices should average above $3 across the Great Lakes region, Green said. They might not get better for the rest of the summer. BP plans to shut another crude unit at its Whiting plant in September, and Phillips 66 is planning a turnaround at the region’s second-largest refinery, in Wood River, Illinois, that month.
“Things should stabilize by the middle of next week,” Green said. “We’ll probably have to wait until after Labor Day when demand drops for prices to fall.”