Refinery Problems, Spill Drive Gas Prices

MADISON, Wis. (AP) — A rare combination of pipeline and refinery problems has exacerbated already rising gas prices in the Great Lakes region, leading to surges of around 35 cents per gallon in just one week, officials said Friday.

Michigan and Indiana’s statewide average price for a gallon of regular unleaded rose 34 cents during the past week to $3.95, making for the highest per-gallon price in the continental U.S, according to auto club AAA. The national average price for a gallon of unleaded, by comparison, moved up just 8 cents over the week to $3.56.

“The rest of the country has seen an increase, but nothing like here in the Midwest,” said Pam Moen, a spokeswoman for AAA Wisconsin. “I don’t think I’ve ever seen prices move this much in a couple of days.”

The Midwest has seen a confluence of freak problems during the past few weeks that have tightened supplies and pushed prices. An Enbridge Energy Partners pipeline that transports crude from Superior, Wis., to Chicago-area refineries ruptured July 27, spraying about 50,400 gallons of crude into a southern Wisconsin field.

It was Enbridge’s second break in the region in just more than two years — an Enbridge pipeline broke in Marshall, Mich., in July 2010, spilling 840,000 gallons — and federal officials have barred the company from re-opening the Wisconsin line until it submits a re-start plan. A company spokeswoman didn’t immediately respond to an email seeking an update on the plan Friday.

Meanwhile, equipment problems have closed parts of refineries in Whiting, Ind., Lemont, Ill., and Wood River, Ill., said Patrick DeHaan, a petroleum analyst at GasBuddy.com.

“The reaction we’re seeing in gas prices, you’d think Iran just tried to close the Strait of Hormuz,” said DeHaan, referring to the Persian Gulf route for one-fifth of the world’s oil. “Just the possibility of a shortage spooks the market.”

Gas prices usually increase in the summer months as demand rises and refineries switch to more expensive, cleaner-burning blends. Plus crude oil prices have risen about $15 per barrel during the last few weeks after bottoming in June at just shy of $78 per barrel, driven largely by positive economic and job forecasts, said Tom Kloza, chief oil analyst for Oil Price Information Service. Wholesale prices have risen as a result, which translates to higher prices on the street, he said.

“It’s the normal nonsense that moves crude,” Kloza said. “What it reminds everyone is these prices are tremendously volatile.”

Drivers should expect gas prices to climb for at least the next few days as retail prices catch up with this week’s 20-cent wholesale increase, Moen said. Pump prices should at least stabilize by next week, she said.

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