Even though the price of crude oil is dropping rapidly, gas prices in the area are increasing and may continue to escalate throughout the week due to an “unexpected issue” at the BP Whiting Refinery in Whiting, Indiana, which is the largest refinery in the Midwest.
The refinery will produce around 11.5 million fewer gallons of gasoline a day if an issue with equipment is not resolved soon, said GasBuddy senior petroleum analyst Patrick DeHaan.
“We are expecting sub-two dollar prices this fall by October, but this refinery issue will raise prices,” DeHaan said. “Over the weekend one of the crude distillation units went down, so that refinery is crippled and that could last several days and impact gas prices for the next week or two. Word is the largest unit went down, which is half the capacity of the whole refinery.”
The BP refinery in Indiana is the seventh largest in the nation. DeHaan said the refinery is not disclosing details with regard to the distillation unit issue, but it is confirmed the unit will be offline for seven to 10 days.
“Sometimes it only takes a few days for a refinery to restart, sometimes it goes on for weeks,” DeHaan said. “Things should stabilize, we’ve seen enough of these issues that I can say yes, things aren’t getting a whole lot worse, but if not, we could see another price hike on Thursday.”
AAA said until today gas prices had fallen for 26 consecutive days, due in part to the increased production of oil in the U.S. and the addition of 32 new oil rigs over the past six weeks, pushing down oil prices. Bloomberg reported the price of crude oil at $44.81 a barrel today at the market open.
Gas prices in the Dayton area were $2.48 a gallon on average, up from $2.40 a week ago. In the Cincinnati area, prices averaged $2.54, up from $2.43 a gallon. The cheapest prices in the Dayton-area were $2.33 a gallon on Costco in Centeville and Sam’s Club in Washington Twp., according to GasBuddy.com. The cheapest Cincinnati-area prices were $2.31 a gallon at three Oxford stations.
Cindy Antrican, AAA Dayton public affairs manager, said gas prices a year ago today were $1.05 higher than they are today.
“We are trying to reach the point where we cannot rely so heavily on foreign markets for gas and oil,” Antrican said. “There’s been a push to be independent, and we’re seeing that now, and drivers are seeing pretty good savings.”
Because of the refinery issue, gas prices may increase rather than decrease, despite falling oil prices. This is because there are fewer refineries in the U.S. than there were thirty years ago, DeHaan said.
“So many refineries have closed because of environmental regulations, so there are fewer and much larger refineries now,” DeHaan said. “So when one of them goes down, it has a huge impact. It’s a much bigger deal.”
BP U.S. has not returned requests for comment.
This article was written by Kate Patrick from The Dayton Daily News and was legally licensed through the NewsCred publisher network.