The Union of Concerned Scientists estimated that Americans would spend $1.4 billion on gasoline over the Memorial Day weekend, the traditional start of the heavy driving season. The group, which supports greater fuel efficiency, said new automobile standards could save motorists $619 million by 2025. That would be enough to buy 300 million ice cream cones, 10.5 million amusement park tickets or 77 million bottles of sunscreen, the group estimated.
The federal Energy Information Administration’s weekly petroleum report blamed the sharp price increases in the Midwest on “both planned and unplanned refinery maintenance.” It said that as a result of limited gasoline production, “inventories, which were robust going into turnaround season, have been significantly depleted.” The agency said getting extra supplies from the Gulf of Mexico coast by pipeline could take as long as three weeks.
Refinery utilization in the Midwest region that stretches from Ohio and Tennessee to the Great Plains slid under 80 percent in the week ending May 10, down from 94 percent a year earlier, according to EIA figures.
“I’m not a conspiracy theorist, but it is really interesting, the timing of all this,” said John Thompson, a spokesman for AAA’s Mid-Atlantic region. He said the timing of the “huge spikes” in price “could not have been worse,” just before the Memorial Day weekend.
“We hope that what we’re seeing is short-lived,” he said.
Senate Energy and Natural Resources Committee Chairman Ron Wyden (D-Ore.) and Sen. Al Franken (D-Minn.) wrote to Energy Secretary Ernest Moniz urging him to use his regulatory authority to prevent the simultaneous shutdown of refineries in a single region.
Stephen Brown, vice president for federal and government affairs at independent oil refiner Tesoro, said that “planned turnarounds never create supply disruptions, as it is not in anyone’s interest to jeopardize existing retail market share by being unable to meet contractual obligations.” He added that “unplanned [outages] is when trouble starts, because they are — no surprise — unplanned and thus supply disruptions can’t be easily mitigated.”
In other parts of the country, including the Washington area, prices remained tame by comparison. The nationwide average cost of a gallon of regular gasoline stood at $3.65 on Thursday, according to AAA’s Daily Fuel Gauge Report. That was just 21
2 cents lower than a year ago.
The East Coast average was $3.49 during the week that ended May 17, according to the Energy Information Administration.
But those prices are still high by historical standards. The average U.S. price of regular gasoline, adjusted for inflation, was higher in 2011 and 2012 than ever before, according to the EIA. The next-highest years were 1981, 2008 and 1980.
Doug MacIntyre, an analyst with the EIA, said that the upper-Midwest price spike was the result of “a combination of factors, but the main thing is we got refinery outages. Some of that for maintenance and some unplanned outages. And we’ve got inventories that have been drawn down to some degree because of earlier refinery issues.”
The EIA noted that planned maintenance efforts at ExxonMobil’s refinery in Joliet, Ill., and Marathon’s refinery in Catlettsburg, Ky., reduced runs by 470,000 barrels a day. Unplanned outages, including those at HollyFrontier’s refinery in El Dorado, Kan., and Flint Hills’ refinery in St. Paul, Minn., compounded the problem.
Longer-term projects already underway “magnified the impact of the planned and unplanned outages,” the EIA said. BP’s refinery in Whiting, Ind., has had 260,000 barrels a day offline since November to install coking capacity and boost its ability to use low-quality heavy crude oil.
The agency said gasoline inventories tend to increase from January to March in anticipation of refineries’ turnaround season. Gasoline inventories in the Midwest began April near the top of the five-year average range but are now at the bottom of the range, the EIA noted.
The American Petroleum Institute blamed the Obama administration for high prices, using the opportunity to press for more open access to federal land for drilling and to urge against raising taxes. John Felmy, API’s chief economist, blamed high crude oil prices.