States in the upper midwest are feeling extra pain this week as mounting refinery malfunctions drive prices at the pump to record highs. Aside from the two Chicago-area breakdowns that were responsible for trouble earlier in the week, problems at refineries in Kansas and Oklahoma also served to exacerbate the situation. According to the USA Today:
“Gas prices in Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, Ohio, Oklahoma and Wisconsin have spiked up to 40 cents a gallon the past week alone…
While the USA may be dripping in new found crude oil deposits and early May supplies were at their highest levels since the early 1930s, issues at a handful of refineries that turn crude into gasoline and diesel fuel underscore how kinks in the supply chain can cause quick surges in what consumers pay at the pump.
In Minnesota, regular, unleaded gas averaged $4.15 a gallon heading into the weekend — an all-time state record. With some Twin Cities outlets now selling gas for more than $4.50 a gallon, making Minnesota the priciest state for gasoline in the continental U.S., overtaking California, which now averages $4.06 a gallon. In oil-rich North Dakota, prices average $3.98, also a record-high.
‘It’s amazing what problems refinery issues can cause,’ says Patrick DeHaan, senior analyst for price tracker gasbuddy.com. ‘If another refinery went down, all hell would break loose.’”
As Americans prepare to hit the road once again for the summer driving season, it appears as though there will be no relief for the immediate future. The Wall Street Journal reports:
“Rising crude-oil prices and tight supplies are among the factors that have recently pushed prices higher at the pump, according to AAA’s Daily Fuel Gauge Report. For 73 consecutive days the national average has been lower than it was on the same day a year ago…
The recent trend toward higher prices has affected most states, with only West Virginia and Ohio posting lower prices now than a week ago. Prices in six states; Oregon, Minnesota, Washington, Oklahoma Nebraska and Iowa) have jumped by more than 20 cents, AAA said.”
This is yet another telling example of the power seemingly insignificant price shocks can have over large parts of the country. As more refineries switch away from their winter mix, more delays and malfunctions remain a definite possibility.