Chicago motorists are seeing sticker shock at the gas pump — paying 63 cents more per gallon Wednesday than they did just a week ago — as part of the Midwest’s largest refinery remains shut down with no estimate on when it will be back up and running.
Gas prices in the metropolitan area averaged $3.44 for regular gas, compared with $2.81 last week, according to AAA’s Fuel Gauge Report. In the the city, the average price was $3.66, up from $3.03 a week ago.
The price surge is the biggest weekly jump since 2005, according to the U.S. Energy Information Administration.
Prices are expected to continue to rise in the short term, as BP’s refinery in Whiting, Indiana — the largest in the Midwest and seventh-largest in the nation — wrestles with “unscheduled repair work” that shut down the biggest of its three crude distillation units Aug. 8.
The reduced production at the refinery, capable of producing 430,000 barrels of refined product per day, has affected supply and caused reverberations in gas prices throughout the Midwest, according to analysts.
“It’s a significant jump between last week and this week,” AAA Chicago spokeswoman Beth Mosher said.
“It’s hard for people to understand, and rightfully so, but this is a very large supplier to gas stations, not just in Chicagoland but really over many areas of the Midwest. And it’s working at about half capacity right now,” Mosher said. “And so supply has to be obtained from other refineries, which pushes prices higher, not just in Chicagoland but throughout parts of Indiana, Wisconsin, Ohio and Michigan.”
In announcing the shutdown Saturday, BP said the repairs were unexpected, and the shutdown was executed without incident. On Wednesday, the company clarified that the shutdown stemmed from a “malfunction,” saying it was working to meet its fuel supply obligations to gas stations and wholesalers but could not say how long the repairs would take.
“The BP Whiting Refinery continues repair work. The rest of the refinery continues to operate safely and is producing fuel for customers, but at lower-than-normal volumes,” BP spokesman Brett Clanton said.
While motorists in the Midwest are familiar with volatile prices during the summer driving season, it’s “very rare” to see the magnitude of the price jumps of the past week, AAA said.
The impact of problems at the Whiting refinery has so far been minor nationally — regular gas was averaging $2.66 nationally, compared to $2.58 last week — but prices will rise as long as the refinery remains offline, AAA said, noting initial reports indicate the malfunction may take at least a month to repair.
However, prices are expected to decline once the refinery is back up, AAA said.
“We think we’ll see these higher prices in the near term, but long-term, we’re going to continue to see mild prices throughout fall and into the winter,” Mosher said.
The Energy Information Administration said Wednesday it did not expect the instability in gas prices to last here, noting a similar pattern after refinery outages on the West Coast earlier this year.
“Following the [Midwest] outage, the supply chain is now in the process of adjusting and the availability of replacement supply is apparent,” the agency said. “It can take markets days or weeks to adjust to the sudden loss of production during unplanned outages. The severity and duration of the higher prices depend on how quickly the refinery problem can be resolved, how soon alternative sources of supply can arrive, and the marginal cost to bring alternative supply to the region.”