| June 7
June 7 Gasoline prices at the pump in several
U.S. Midwestern states have spiked close to record highs this
week and were expected to stay near those levels for several
weeks due to unexpected outages at key regional refineries,
industry analysts and traders said on Friday.
All but four of the 25 most expensive cities for gasoline in
the United States are in Midwestern states such as Illinois,
Michigan and Indiana, according to GasBuddy.com, which monitors
retail prices across the country through consumer input.
In Chicago, Illinois, the most expensive city, consumers pay
on average $4.47 for a gallon of gasoline -- $1.34 more than in
the cheapest city of Spartanburg, South Carolina. Prices in
Chicago have jumped 30 cents since last Friday and are close to
a record high to $4.56 in March last year, according to
These price spikes have moved east from Midwestern states
such as North Dakota, Minnesota and Nebraska, where some cities
experienced record high prices a few weeks ago, but the reason
is the same -- refineries are undergoing maintenance work.
"The latest report from the EIA did say gasoline inventories
grew a small amount but that may not be enough for what is going
on. So this may last several weeks," said Patrick DeHaan, a
petroleum analyst with Gasbuddy.com.
Maintenance at Exxon Mobil Corp's 238,600 barrel per
day (bpd) Joliet refinery has shut down production since April
14, far longer than some market watchers and industry
intelligence groups had expected. Traders said the work could
continue until late June.
And Phillips 66 said it had started maintenance at
its 356,000 bpd Wood River refinery, though it did not say
whether any units of the refinery had to be shutdown.
NOT ON THE RADAR
Together, Joliet and Wood River can process over 60 percent
of the 940,000 bpd of refining capacity in Illinois, whose four
refineries underpin the Chicago spot gasoline market.
In addition, a large crude distillation unit at BP's
405,000 bpd Whiting, Indiana, refinery has been shut since late
last year for an upgrade and was now expected to start up in
late June -- a month later than some had previously thought.
Prices at the pump in the country are underpinned by an
intermediate market that moves fuels between a refiner and a
retailer. The trades are expressed as a deficit or premium to
the price of futures contracts on the New York Mercantile
These differentials for Chicago gasoline jumped last week by
as much as 45 cents gallon to trade at a premium to gasoline
futures of 80 cents a gallon, the highest level in at least a
year. Differentials normally move by several cents a week.
"When I do a trade I try to anticipate all the potential
outcomes and assign them a probability. I can say north of
60(cents) was not even on my radar," said one trader.
"I would like to be standing here saying the end is in sight
but frankly the situation seems to growing more acute," the
Refiners do not disclose their maintenance schedules and
rarely confirm unexpected shutdowns or restarts. Few expected
maintenance at Wood River after Phillips 66 spent at least seven
weeks working on the plant in February-April earlier this year.
"I don't have any specifics but it will probably be a few
weeks (before the work at Wood River is finished), if it's
anything like a normal refinery. So Chicago basis for at least
the next three weeks will stay at a significant difference to
other regions," DeHaan said.