WHITING | Michigan officials are calling for a price-gouging investigation after a unit went off-line by BP Whiting Refinery, triggering what GasBuddy.com called "one the worst hikes in prices ever seen at the pumps."
Retail gas prices soared throughout the Midwest after the country's largest refinery outside the Gulf of Mexico shut down its largest crude distillation unit for unexpected repairs. Gas skyrocketed by 71.9 cents per gallon in the Gary metropolitan area over the past week, and the average price in Northwest Indiana was $3.18 a gallon as of Tuesday, according to GasBuddy.com. The national average rose 8.5 cents per gallon to the an average of $2.68 a gallon.
"Prices have risen in Great Lakes states at paces rivaling and exceeding prior records, which I would pin on an unexpected emergency shutdown of a unit at BP's Whiting, Ind., refinery," GasBuddy senior petroleum analyst Patrick DeHaan said.
DeHaan said there have also been scheduled outages "that may be leading to gasoline demand outpacing supply in the region, essentially causing panic on gasoline markets."
The BP Whiting Refinery, the largest in the Midwest, provides gas to seven Midwestern states.
Gas cost an average $2.92 a gallon in Indiana, $2.96 a gallon in Michigan and $3.16 in Illinois as of Tuesday, according to GasBuddy. The average price in Chicago was $3.47 a gallon.
"Hikes have been witnessed across many states, though the epicenter of gargantuan hikes was centered in Michigan, Indiana and Illinois, where prices raced up by over 50 cents a gallon in mere days," DeHaan said.
"At this point, it does appear that most of the price shocks are behind us, though if there are any curve balls that hit the market, all bets are off," he said, noting prices outside the region are declining.
Gas prices, however, are likely to remain high for at least several weeks while repairs are made to the crude distillation unit in Whiting, Purdue University Energy Economist Wally Tyner said. The shuttered unit produces about 7 million gallons of gas a day -- about 40 percent of the 16.8 million gallons Indiana motorists consume each day.
Michigan pols demand details of refinery outage
Michigan state Sen. John Proos and state Rep. Michael Webber called for an investigation into potential price-gouging at a time when crude oil prices have been at a six-year low.
"I am calling into question the approximately 80-cent increase in a matter of days that Southwest Michigan residents are being forced to pay at the pump," said Proos, a Republican who represents the Lake Michigan shoreline city of St. Joseph.
"A single glitch at a regional plant is causing a drastic and sudden increase in gas prices when the 2015 average price of a barrel of crude oil is projected at $49."
Webber, a Republican from Rochester Hills north of Detroit, said an 80 cents-per-gallon spike was unreasonable, especially without a timeframe when prices may return to normal.
Michigan Attorney General Bill Schuette fired a letter to BP demanding an explanation.
"Many constituents express disbelief that reported problems at various refineries, as is the recent case, can cause such direct and immediate effects at the pump," he wrote.
"Moreover, some members of your industry have simply said that there are so many factors that affect gasoline pricing that it is hard to provide clarity to the general public ... Consequently, I'm asking that BP explain what occurred at the BP Whiting Refinery, as well as an estimated return to service and additional information about why this immediately led to a price spike throughout Michigan."
Extra barrels will come up from the Gulf Coast to Chicago to provide some relief at the pumps, but it takes about 14 days for a single barrel to travel to Northwest Indiana by pipeline, GasBuddy senior petroleum analyst Will Speer wrote in a blog post.
"The cavalry has been called; now motorists must endure for the time being," he wrote.