Gas Price Hike: Refinery Repair A Month or More Away

[JBMcB]

So why does a refinery issue at B.P. result in higher prices at the Mobil station?

Fun facts:

1. Oil refineries operate, more or less, independently of the parent oil companies. Oil is bought on the open market from anyone willing to sell. A BP refinery might get their gas from a Shell-run oil well, or an independent owner, or whomever.

2. Gas station owners, usually, buy their gas from whomever is most convenient or cheapest. Their franchise agreement might include a rider on whom to buy gas from, but it isn't always the oil company itself.

3. A lot of gas stations around here get their gas from the Marathon refinery downriver, delivered by a 3rd party like Corrigan oil. That Amoco super cleaner fuel stuff you see advertised? It's just a jar of detergent the gas station owner adds to their underground tank.

4. The gas station owner sets their price based on what it's going to cost to buy the next delivery of gasoline. If production gets cut for whatever reason, they know the price is going to go up, but they don't necessarily know by how much. That's why, when the price jumps, it's $0.20 more at one station, $0.25 more at another, $0.50 at a different one. After a couple of weeks the price increase smooths out.

[Jimaz]

1 Month Average Retail Price Chart from DetroitGasPrices.com

[stasu1213]

It's strange that the prices were spiked just in time for the Woodward Dream Cruise. Coincidence?

[mtburb]

Today's Free Press mentioned that because of all of this, the $1 prices that were predicted for the end of this year are now in jeopardy.

[MikeM]

It's strange that the prices were spiked just in time for the Woodward Dream Cruise. Coincidence?

Yes! You know BP management had the Dream Cruise penciled in on their calendar all year. Because fuel consumption this weekend accounts for like a per cent of their daily production.

[Bobl]

Most in my area are charging $2.99 for regular. Seems nobody wants to be the first to surpass $3.00. One, right in my neighborhood, is charging $2.89. Guess who I will patronize in the near future?

[wilderness]

This is why you are wasting your money if you aren't purchasing your gas from the lowest cost gas station.

Once you've had the experience of getting one bad tank of gas [[or even a partial tank) from one of these no brand stations, and the very-expensive-costs [[try finding a repair shop these days that is willing to drop and flush a gas tank) of getting all that crap removed from your vehicles fuel system? I can assure you your few penny savings method of thinking will change drastically.

[RaumVogel]

This is what I call the "oops" factor.You go to a bar that you know the price of a certain drink.Oops,the bartender "accidentally" charges you too much.If you catch them,you get a "rebate".If not they profit.Retailers and grocery stores do it all the time.Price at the shelf $2.25...price when tallied at the cash register..$2.89.Refinery in Ind. needs maintenance in a certain area,but may keep producing for another year or two without it? Oops,we had a leak,we have to fix it.

[Ray1936]

Gas is a fungible commodity.

Dang, I thought my vocabulary was as good as anyone's. But added to it today. Thanks, ndavies. From Wikipedia:
Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution. That is, it is the property of essences or goods which are "capable of being substituted in place of one another."^[1] For example, since one ounce of gold is equivalent to any other ounce of gold, gold is fungible. Other fungible commodities include sweet crude oil, company shares, bonds, precious metals, and currencies. Fungibility refers only to the equivalence of each unit of a commodity with other units of the same commodity. Fungibility does not relate to the exchange of one commodity for another different commodity.
The word comes from Latin fungibilis from fungi, meaning "to perform", related to "function" and "defunct".

[313WX]

Gas is a fungible commodity. All the fuels come from regional refineries. All of the local gas stations in the Detroit area get their fuel from the Marathon refinery in SW Detroit.

Some gas stations in the far northern and NE suburbs may also get their fuel from the Sunoco refinery in Sarnia, Ontario...

[Gpwrangler]

Yes! You know BP management had the Dream Cruise penciled in on their calendar all year. Because fuel consumption this weekend accounts for like a per cent of their daily production.

Everyone's all using ethanol free premium boat gas or leaded aviation fuel in those old engines. I won't get near my old cars with that corn gas!

[Jimaz]

Some gas stations in the far northern and NE suburbs may also get their fuel from the Sunoco refinery in Sarnia, Ontario...

This is useful if only for its comprehensiveness: List of oil refineries. [[Whiting is under Indiana, not Illinois, if that matters.)

[ferndalien]

Some gas stations in the far northern and NE suburbs may also get their fuel from the Sunoco refinery in Sarnia, Ontario...

I'm going to be that guy - Suncor, not Sunoco. Sunoco hasn't had any refineries for about 3 years now.

[3WC]

According to OilPro [[a newsletter for people in the industry) the refinery will reopen between Aug. 19th and the 22nd. That's as of 2 or 3 days ago. My guess it will be sooner.

My high school chemistry class took an all-day tour of the refinery 60 years ago. Fascinating place. It was old then. I lived in East Chicago for a time [[the refinery is located partly in East Chicago, IN, Hammond, IN, but mostly in Whiting ["where the sun never shines."])

It was build by Rockefeller in 1889 and was the largest refinery in the world for many years. It's probably the oldest operating refinery today although Rockefeller's Toledo refinery may be a bit older. It was owned and operated by Standard Oil of Indiana [[S.O.) until BP acquired the company.

Everybody who's driven on I-94 to Chicago has passed that refinery, a couple of others, and two or three major steel mills. It's the most heavily industrialized 8 miles in the country, maybe the world.

Whiting processes between 270,000 bbls a day to 400,000 BOD, now, mostly heavy crude from Alberta in Western Canada.

Its gas is sold in 7 states, much of it in MI.

Detroit's gasoline comes from several refineries in IL, IN, and MI. Maybe others.

When I toured Whiting years ago it had a primitive look. There was an old house on the site which was built before the refinery. Inside were about 30 very elderly women, none speaking English, wearing babushkas, hand dipping candles made frojm waste wax resulting from the refining process. S.O. also manufactured Parawax there; it was used in home canning to seal the jars. SO didn't waste an ounce of anything.

Another thing S.O. manufactured there were aerosol "bug bombs." People used to buy a few of them and set them off in their homes, leave for an hour, and come back to find the whole house bug free. God knows what chemicals were in them but they did the job.

Most fascinating was the experimental lab where they bred and raised insect and bugs to gigantic sized. Cockroachs, moths, spiders and other flying and crawling insects and bugs were several times larger than their unmodified cousins. They explained that they tested new chemical formulas on the modified creatures.

[ABetterDetroit]

But a nickel a gallon a year for 4 years in row would have killed us. Those evil price increases should never be for "taxes" even if it would rebuild our FUBAR roads and put people to work in our state.

[Dan Wesson]

Well whadoyaknow... gas dropped a dime near here. The long slow decent begins again.

[Cincinnati_Kid]

Pure BS....where is Trump on this one [[gas companies fleecing americans)?

I hope that clown Trump buries himself in a hole, and stays there until after the election.

[Cincinnati_Kid]

Well whadoyaknow... gas dropped a dime near here. The long slow decent begins again.

Don't know where you're at, but gas went up to $3.19 from $2.97 in less than 24 hrs down the road from me

[Dan Wesson]

Don't know where you're at, but gas went up to $3.19 from $2.97 in less than 24 hrs down the road from me

I can see that. Quite a spread in Metro Detroit

http://www.detroitgasprices.com/

[emu steve]

Commodity prices can go up or down with the product already in inventory.

Commodity prices are like stocks [[or tulips centuries ago), they can go up, down, sideways, etc. based on the irrational actions of those speculating in them.

Or like housing, if the prices are too high or too low they will eventually find the 'correct' level. Ditto stocks.

This will happen with gasoline prices. Once the refinery is running normally again, there will be a glut of gasoline and prices will decline. And then the market will find equilibrium once secondary gasoline sources fade away.

[Dan Wesson]

Commodity prices are like stocks [[or tulips centuries ago), they can go up, down, sideways, etc. based on the irrational actions of those speculating in them.

Or like housing, if the prices are too high or too low they will eventually find the 'correct' level. Ditto stocks.

This will happen with gasoline prices. Once the refinery is running normally again, there will be a glut of gasoline and prices will decline. And then the market will find equilibrium once secondary gasoline sources fade away.

I used to believe that. But, since 2008, my eyes were opened concerning the manipulation of markets and the tools with which it is done.

p.s. and still learning each and every week the depth of manipulation legal and illegal, of manipulations that maybe legitimized by lobbying Congress but are morally bankrupt.

[Gpwrangler]

I used to believe that. But, since 2008, my eyes were opened concerning the manipulation of markets and the tools with which it is done.

p.s. and still learning each and every week the depth of manipulation legal and illegal, of manipulation that maybe legitimized but are morally bankrupt.

Speaking of market manipulation did you notice how we all car pooled when it hit $4?

[gazhekwe]

This does seem to happen every summer with one or another midwestern refinery. Last year it was one in Illinois I believe. I really believe it is engineered. Investigate! This causes a lot more harm than E-mailgate. It is Big Oil scheming and manipulating the market.

[Honky Tonk]

This does seem to happen every summer with one or another midwestern refinery. Last year it was one in Illinois I believe. I really believe it is engineered. Investigate! This causes a lot more harm than E-mailgate. It is Big Oil scheming and manipulating the market.

Of course it's a scam. Two days ago the media announced oil price per barrel is the lowest it's been in years, $42 per, and there's a surplus of gasoline. Reminds me of the methane scene in Mad Max Beyond The Thunderdome, "EMBARGO". The other one I've noticed over the years is price per gallon takes a nose dive about a month before the Christmas Holiday. Encouragment for credit card overload? They're the only game in town and they know it. The genie is out of the bottle and there's no going back.

[Jimaz]

BP can’t stop putting itself in the line of fire

... [BP] told Quartz it may know by the end of the weekend when service at the refinery will be restored. Oddly, the outage at the Whiting Refinery is also mostly to blame for the plummeting price of US and Canadian grades of oil over the last week. [chart at the link]...

The Whiting refinery is large ...—it can process 413,000 barrels of oil a day, sufficient, according to BP, for the daily needs of 430,000 cars and 22,000 commercial trucks.

The incident–especially the spike in gasoline prices–has generated more political trouble for BP, which has still not entirely recovered from the 2010 Gulf of Mexico oil spill: Jumping on an easy political winner, Michigan’s attorney general has publicly released a letter demanding that BP explain what’s going on at Whiting, and with gasoline prices....

They're saying the reason oil prices dropped is because oil supplies are backing up. Other refineries can't pick up the slack.

The average retail price chart [[to which I linked above) seems to show that local prices have peaked for now although that could easily change depending on news of the repair.