Gas Price Hike: Refinery Repair A Month or More Away

**Jimaz** · August-12-15, 03:36 PM

In case anyone was wondering what caused the recent price hike, this is one of those rare cases where it's not a mystery.

How 1 Indiana refinery drives up Michigan gas prices

[The problem] occurred this past Saturday, Aug. 8, at BP's refinery in Whiting, Ind., where its largest crude distillation unit — which begins the first step in processing oil — suffered an issue and capacity fell by more than 50 percent....

"Though BP is partially down, they're not making money when they're not selling gasoline. They're losing money."

Reuters reports repairs could take a month or more....

"Because crude oil has been so cheap, refineries have been incentivized to keep producing," [Patrick DeHaan, a GasBuddy senior petroleum analyst,] said. "This is not a time when refineries are deliberately slowing down."

I read somewhere else that it was an unexpected problem with leaking pipes in the initial unit that feeds the rest of the operations at Whiting.

**Ray1936** · August-12-15, 05:25 PM

If you believe what the oil companies tell you......well, never mind. Anyway, gas in Las Vegas has been around 3.30 all summer, and thirty-fourty cents higher in CA.

**Dan Wesson** · August-12-15, 07:29 PM

This ain't the first time gas has got close to $2 only to shoot up to $3 this summer. Then it takes a good while to come close to $2 then back up it goes. Do I see a pattern? You're darn tootin' I do.

I have witnessed that saw tooth pattern go up and down 50 to 75 cents for years now.

**313WX** · August-12-15, 07:56 PM

Before these so-called refinery issues popped up, I heard the reason for the high prices was because the oil companies are using a special blend for the Summer, which is more expensive to process.

If you all recall back in January, when the price of oil had fallen below $43/barrel, the price of gas was about $1.70 [[nearly $1 cheaper).

**Hermod** · August-12-15, 07:59 PM

Originally Posted by Ray1936

If you believe what the oil companies tell you......well, never mind. Anyway, gas in Las Vegas has been around 3.30 all summer, and thirty-fourty cents higher in CA.

Ray, California deserves it.

**Hermod** · August-12-15, 08:03 PM

Originally Posted by Dan Wesson

This ain't the first time gas has got close to $2 only to shoot up to $3 this summer. Then it takes a good while to come close to $2 then back up it goes. Do I see a pattern? You're darn tootin' I do.

I have witnessed that saw tooth pattern go up and down 50 to 75 cents for years now.

OK, gallon of cheap leaded regular in 1955 was $0.22 a gallon. I just filled up with more expensive unleaded regular at $2.52 a gallon [[more expensive to refine).

In 1955, I could mail a 1st class letter for three cents and now it is 40-plus cents.

Who is ripping us off, the oil sheiks or the postal unions?

**Gpwrangler** · August-12-15, 08:38 PM

Originally Posted by Hermod

OK, gallon of cheap leaded regular in 1955 was $0.22 a gallon. I just filled up with more expensive unleaded regular at $2.52 a gallon [[more expensive to refine).

In 1955, I could mail a 1st class letter for three cents and now it is 40-plus cents.

Who is ripping us off, the oil sheiks or the postal unions?

Yeah but what was hourly wage back then? When gas was $.55/gal I was making $4 per hour.

If people used less when it hit $3 it would always be $2. But we use as much at $5/gal as we do at $2/gal. Question is, why does it go back down at all?

**softailrider** · August-12-15, 08:46 PM

I hate to bring this up but if you want to beat them at their own game 2015 Toyota Prius are selling for 20200.00 plus tax. That's like 5K off msrp. I don't want one but it's tempting, they do get close to 50 MPG which is pretty damm good.

**Lowell** · August-12-15, 08:57 PM

These price spikes amuse me. One would thing that all the gasoline in all the underground tanks in the all the gas station in the metro was suddenly delivered today with the station owners suddenly having to pay 50 cents more per gallon. What a nice little 20% bonanza.

**Smirnoff** · August-12-15, 08:59 PM

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

**Ray1936** · August-12-15, 09:06 PM

Originally Posted by Hermod

Ray, California deserves it.

That part is true. Alas, most of our gas in Nevada comes from the People's Republic.

**401don** · August-12-15, 09:06 PM

Well over here in Canada we have a plan. We let American oil companies dig out OUR oil, send it to the U.S. for refining, then we buy it back at world prices in U.S. dollars and pay 50% more than Americans at the pump. Pretty smart eh!

**Smirnoff** · August-12-15, 09:12 PM

Originally Posted by 401don

Well over here in Canada we have a plan. We let American oil companies dig out OUR oil, send it to the U.S. for refining, then we buy it back at world prices in U.S. dollars and pay 50% more than Americans at the pump. Pretty smart eh!

Sounds similar of what the U.S. did in the Middle East, we located the oil & even built all of the oil rigs....

**msamslex** · August-12-15, 09:28 PM

I just got gas yesterday. Should have sacrificed and spent a bit more. Will be staying parked even more than I do now.

**ABetterDetroit** · August-12-15, 09:35 PM

Originally Posted by 401don

Well over here in Canada we have a plan. We let American oil companies dig out OUR oil, send it to the U.S. for refining, then we buy it back at world prices in U.S. dollars and pay 50% more than Americans at the pump. Pretty smart eh!

I don't know so that's why I'm asking: What pays for all those nice roads, trains and buses you have all over Toronto? Is there a tax on fuel that might be higher than stateside?

**Dan Wesson** · August-13-15, 03:22 AM

Originally Posted by Hermod

OK, gallon of cheap leaded regular in 1955 was $0.22 a gallon. I just filled up with more expensive unleaded regular at $2.52 a gallon [[more expensive to refine).

In 1955, I could mail a 1st class letter for three cents and now it is 40-plus cents.

Who is ripping us off, the oil sheiks or the postal unions?

The Federal Reserve and their policy of 2% or more inflation a year which deflates your purchasing power.

**Gpwrangler** · August-13-15, 04:02 AM

Originally Posted by Lowell

These price spikes amuse me. One would thing that all the gasoline in all the underground tanks in the all the gas station in the metro was suddenly delivered today with the station owners suddenly having to pay 50 cents more per gallon. What a nice little 20% bonanza.

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

**Honky Tonk** · August-13-15, 04:35 AM

My thumb hurts. When I walk in to work today, I'm going to tell them I'll need to charge them 20% more to do my job. I'll keep everyone posted how that'll work out for me.

**mikeg19** · August-13-15, 05:46 AM

Originally Posted by Gpwrangler

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

Which is ridiculous to think about, but 100% correct. I think it's just frustrating to everyone when this happens because we all know that the price will jump $0.50 overnight, but it's going to take 6 months for it to come back down. If it worked both ways, such a when the refinery is fixed, gas came back down overnight, I think we might not be as pissed.

**Dan Wesson** · August-13-15, 06:38 AM

Originally Posted by mikeg19

Which is ridiculous to think about, but 100% correct. I think it's just frustrating to everyone when this happens because we all know that the price will jump $0.50 overnight, but it's going to take 6 months for it to come back down. If it worked both ways, such a when the refinery is fixed, gas came back down overnight, I think we might not be as pissed.

Yep, what your basically seeing is this...

This way gas retailers can't be accused of fixing a price and they get their average price up there.

**ndavies** · August-13-15, 07:06 AM

$0.22 from 1950 has the buying power of $2.18 in 2015 when adjusted for inflation. That makes $2.18 a gallon gas equivalent to $0.22 gas in 1950. So when you adjust for inflation, Even at $3.00 a gallon, it would be like having $0.30 gas in 1950.

**JBMcB** · August-13-15, 07:37 AM

So the refinery cuts production by 50% to reap a profit of 20% higher gas prices? They are economic geniuses!

I swear, the only subject ignored more than critical thinking in public schools is economics.

**Jimaz** · August-13-15, 07:44 AM

Originally Posted by Jimaz

In case anyone was wondering what caused the recent price hike, this is one of those rare cases where it's not a mystery....

Reuters reports repairs could take a month or more....

Now I'm reading 7-10 days:

Great Lakes Gas Prices Expected to Rise on Unplanned Refining Issue

BP Whiting doesn’t have the only reported issue. Phillips 66 Wood River near the St Louis area was also rumored to have ongoing maintenance. A Marathon refinery in Robinson, IL had planned maintenance this week on a hydrocracker, reformer, and potentially a CDU. If Marathon has no ability to push this maintenance back, it could further strain gasoline prices as the market waits a reported 7-10 days for the BP Whiting CDU to return.

**Kevgoblue** · August-13-15, 10:20 AM

So why does a refinery issue at B.P. result in higher prices at the Mobil station? Wouldn't it make sense to keep the prices where they are and effectively poach all of B.P.'s customers? And if the other stations don't keep their prices stable shouldn't that fall up under that "price gouging" law?

**ndavies** · August-13-15, 11:11 AM

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.

It doesn't matter what the sign on the gas station says, they all get it from the regional refineries.

A cut off in the refinery from Chicago means the Chicago region will pull gasoline from the other refineries in the Midwest.

The only difference in fuels from station to station is the additives they add to the fuel as it is being pumped into the tanker truck on its way to the gas station. Before that tanker truck all the fuel is the same.

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