WHITING | Filling your tank suddenly got a lot costlier because of an unplanned outage at the BP Whiting Refinery.
A 250,000 barrel-per-day crude distillation unit went down because of a mechanical breakdown, and it's not immediately clear how long it will take to fix, according to sources familiar with the situation.
The unit that malfunctioned is the largest of three crude distillation units at the refinery on Lake Michigan's southern shore, and single-handedly accounts for more than half its 428,000-barrel-per-day capacity.
Such an outage affects the production of gasoline, asphalt, jet fuel and every other product the refinery makes, since the distillation process is the first step of refining crude oil.
Gasbuddy.com estimates the outage likely will drive up retail gas prices by 25 to 50 cents per gallon during the next week across the Midwest. Market gasoline prices shot up almost immediately because of concerns that the largest refinery in the Midwest wouldn't produce as much gasoline.
Senior Petroleum Analyst Patrick DeHaan said the refinery's crude distillation unit may be down for seven to 12 days, and that prices could near $3 in the Midwest.
Retail gas prices reportedly jumped up by as much as 40 cents a gallon in Northwest Indiana Tuesday. The average price in the Gary metro was $2.60 a gallon as of Tuesday afternoon, according to Gasbuddy.com.
DeHaan said today's hike could look like a bargain compared to next week.
The spike in Midwestern gasoline prices comes at a time when you'd least expect it, while crude oil is nearing a six-year low because of a bump in Iranian oil production and a devaluation of the Chinese yuan.
The U.S. Energy Information Administration predicted crude oil prices will average only $49.62 a barrel this year, down from last month's projection of $55.51 a barrel.