WHITING | Motorists should expect some relief at the pump because the BP Whiting Refinery has fixed a crude distillation unit that caused gas prices to spike across the Midwest when it went offline two weeks ago.
Gas prices are expected to plunge, but not as fast as they climbed when the markets learned the BP Whiting Refinery, the largest in the Midwest, would not be able to produce as much fuel as normal. The 250,000-gallon-a-day crude distillation unit is the largest of three at the refinery.
"BP has safely restarted a large crude distillation unit that had been shut down since Aug. 8 for unscheduled repair work," the company said in a statement. "Restart of this unit is increasing the refinery's fuel production, with output ramping up over time. The rest of the refinery continues to operate safely. In the meantime, the company continues to meet its contractual fuel supply obligations."
Prices could drop by up to 50 cents a gallon over the next two weeks.
"GasBuddy is anticipating a steep decline in the price of gasoline throughout the Midwest, so long as operations at this BP refinery (and other refineries in the region) continue with no new problems," Senior Petroleum Analyst Patrick DeHaan wrote.
Gasoline prices in Illinois, Michigan, Ohio, Indiana, Wisconsin and neighboring states affected by the refinery could fall 20 to 50 cents a gallon over the next two weeks, DeHaan said. As gas stations buy cheaper gasoline, they are expected to pass savings along to motorists.
Prices will fall more gradually than they rose because gas station operators will be careful about dropping retail prices to make up for the profits they lost when wholesale prices skyrocketed, DeHaan said.
The average price of gas in the Gary metropolitan area was $2.92 as of Tuesday afternoon, according to GasBuddy. The average price had been $3.02 at the beginning of the week and $3.18 two weeks ago.
Politicians throughout the Midwest, including Chicago Mayor Rahm Emanuel and Illinois Attorney General Lisa Madigan, had demanded explanations from BP about the sudden price hike and called for a formal investigation.
"There was tremendous pressure on BP from all corners really," DeHaan said.
Michigan state lawmakers demanded an investigation, and the Michigan Attorney General wrote a letter to BP asking for more explanation of how gas prices rose so fast and when it anticipated fixing the problem in Whiting.
Congresswoman Jackie Walorski, R-Ind., and Congressman Fred Upton, R-Mich., also wrote a letter to BP Chief Executive Officer Bob Dudley demanding answers about why consumers were paying so much more at the pumps overnight.
"Some areas of the Midwest have seen prices rise over $1 per gallon over a 24 hour period, disproportionately affecting the most vulnerable of our constituents and resulting in large unpredicted costs in getting goods to market across the region," Walorski and Upton wrote. "Additionally, some are worried that speculators may force additional increases due to lack of information."
On Monday, Madigan and Emanuel demanded an explanation from the Illinois Petroleum Council, calling the high prices outrageous.
"Gasoline is not an optional purchase for many hard-working Illinois residents, and paying more for gas means less money to spend on other essentials like rent, groceries and medicine," Madigan said. "Unfortunately, every time gas prices rise, the oil companies give us excuses. The oil companies need better contingency plans because drivers deserve answers and relief from these outrageous prices."
Crude oil prices have plunged to a six-year low of around $40 a barrel. AAA estimated the average national price of retail gasoline was $2.57 a gallon Tuesday.
Emanuel said it wasn't fair for Chicagoland residents to pay so much more.
"Rising oil prices mean a rising cost of living for Chicagoland residents," Emanuel said. "It's time for the highly profitable oil companies to stop playing games with the wallets of Chicagoans and to stabilize prices at the low levels seen throughout the United States."