Woes at refineries push gas prices up
Troubles at several oil refineries are driving gasoline prices sharply higher in the Midwest, and the regional shortages are expected to boost pump prices nationwide.
Gas prices in Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, Ohio, Oklahoma and Wisconsin have spiked as much as 43 cents a gallon the past week alone. Behind the rise: outages and extended maintenance, which have curbed output at refineries in Joliet, Ill., Whiting, Ind.; Tulsa, Okla.; and Eldorado, Kansas.
While the U.S. may be dripping in new found crude oil deposits and early May supplies were at their highest levels since the early 1930s, issues at a handful of refineries that turn crude into gasoline and diesel fuel underscore how kinks in the supply chain can cause quick surges in what consumers pay at the pump.
Minnesota is particularly hard hit. Regular-grade gas averages $4.26 a gallon this weekend — another state record after spiking to $4.15 Friday. That makes Minnesota second only to Hawaii — averaging $4.36 — for the nation's highest-priced gasoline. Oil-rich North Dakota, averaging a record $4.13, is third, ahead of California ($4.06), usually the priciest in the continental United States.
“It's amazing what problems refinery issues can cause,” said Patrick DeHaan, senior analyst for price tracker gasbuddy.com. “If another refinery went down, all hell would break loose.
Nebraska, Iowa and Oklahoma could soon set record-highs, DeHaan said.
Nationally, prices average $3.64 a gallon this weekend after beginning 2013 at $3.29. Some industry observers thought this year's prices had peaked at $3.78 in February after sliding to $3.50 April 29. But the Midwest's refinery issues are now expected to propel prices for several weeks, perhaps to $3.85 a gallon nationwide.
“Supplies were already low in the Midwest — that's why we're seeing such a dramatic increase. While this is a regional problem, it's definitely going to push overall prices up — no doubt about it,” said Brian Milne of energy adviser Schneider Electric.
The price surge in the Midwest could have a broader economic impact. Thursday, the Labor Department said April's drop in gas prices helped push consumer inflation down 0.4% Earlier this week, the Commerce Department cited lower-priced gas for spurring a slight gain in April consumer spending.
Rising gas prices likely will reverse both trends, however.
“In each of the last two years, 60 percent of Americans said they cut back on discretionary spending when gas prices rise,” said Greg McBride, senior financial analyst for Bankrate.com. “There's no reason to expect a different result in 2013. And any surge in gas prices would further detract from meager economic growth.”