By PATRICK DeHAAN
Nowhere in the country have motorists seen gasoline prices rising as fast as they have in the Great Lakes in recent days. Michigan, Indiana, Ohio, Kentucky and Illinois have been particularly hard hit this week and gas prices may soon rise to their highest since 2015 due to several issues.
The issues at work that are driving prices up so quickly: Refinery maintenance, a major pipeline outage and low gasoline inventories. Part of the blame could even be placed on long-gone Hurricane Harvey, as some refiners pushed back maintenance to cover production losses from the affected area. Now with Harvey gone, that pushed-back maintenance is colliding with other planned maintenance leading to a condensed maintenance season. Second, the Explorer Pipeline, with the capacity of nearly 700,000 barrels per day, sustained a leak last week interrupting the ability for relief supplies to be sent from the Gulf Coast. Third, all of these issues have pushed gasoline inventories to their lowest levels in more than two years.
Wholesale gasoline prices have seen an impressive rally in the last week, rising nearly 50 cents per gallon, including another double-digit gain on the market today in response to continued tightness in the region. The issue is also causing gas prices to skyrocket in areas of Canada as well. A major problem that the Great Lakes doesn’t have that other regions do: The ability to resupply via waterborne shipments and pipeline deliveries.
It appears that due to the continued rise, hikes that have already happened in these areas have not covered the full jump of the rise in wholesale cost. Prices in Michigan, Indiana, Ohio, Kentucky and Illinois could soon jump to their highest levels since BP’s refinery outage in August 2015. GasBuddy estimates gas prices could soon rise to $2.99 in Michigan, $2.95 in Indiana and $2.89 in Ohio and Kentucky. Prices in Illinois, mainly around Chicago, could exceed $3 per gallon.
Relief will come eventually, once the Explorer Pipeline is repaired which is expected to be fixed within days. Even then, it will take days for gasoline flows to return to normal. The problem of refinery maintenance will still linger.
Motorists are cautioned to prepare for higher gas prices soon.
Patrick DeHaan is the Head of Petroleum Analysis (USA). Based in Chicago, Patrick brings to GasBuddy all his assets to help consumers by giving reliable and accurate price forecasts, including the San Jose Mercury News dubbing Patrick “one of the nation’s most accurate forecasters” in 2012.