Gas prices just jumped across the Midwest after the Whiting refinery in Indiana, the largest inland crude facility in the U.S., shut down key units last Tuesday.
The outage came after days of heavy rainfall and flash flooding in the area. The impact? Drivers in Michigan, Ohio, and Wisconsin started this week staring at pump prices that were up as much as 27 cents compared to last Monday.
That data came from the American Automobile Association, which showed also that nationally, gas prices barely budged, rising just 2 cents, showing how isolated and regional the damage really is.
BP managed to bring back one of its two primary processing units on Monday. But the partial restart didn’t ease any pressure. There’s simply not enough slack in the system.
With Labor Day weekend starting in just a few days, and travel demand expected to spike, drivers in the region are likely stuck with high costs until at least mid-September.
Whiting shutdown slams Midwest as Canton refinery stays offline
The Whiting facility, owned by BP, has a capacity of 435,000 barrels per day, and when it goes down, it hits the region’s supply fast. And this time, things are even tighter because Marathon Petroleum’s refinery in Canton, Ohio, is also out.
That plant, which processes 100,000 barrels per day, is undergoing scheduled maintenance that started earlier this month. The full turnaround is expected to last into early or mid-September. So now, the two most important regional plants are either down or running below normal capacity at the same time.
On top of that, Midwest gasoline inventories are already low. They’re sitting below both last year’s levels and the five-year seasonal average. That’s made everything worse, and even a full Whiting restart wouldn’t have fixed it in time for Labor Day. It’s too late. The gas that’s already in the system is all there is for now.
Meanwhile, oil futures just keep rising. Brent crude closed Monday at $68.80, up $1.07 or 1.58%. West Texas Intermediate ended the session at $64.80, climbing $1.14, or 1.79%.
The rally has been building since last week and shows no sign of slowing down. The reason is the growing risk of supply disruption from Russia as the war in Ukraine continues to escalate.
Sanctions, drone attacks and tariffs trigger more oil price pressure
Tensions in Eastern Europe have bled straight into oil markets again. U.S. President Donald Trump said Friday that if peace talks between Russia and Ukraine don’t produce results within two weeks, Washington will impose more sanctions on Moscow.
He also warned that India could face new tariffs for continuing to buy Russian crude. Trump’s approach has added pressure to an already fragile market that’s still reacting to physical attacks on Russian energy infrastructure.
Over the weekend, U.S. Vice President JD Vance said Russia had made “significant concessions” toward a deal. But on the ground, that hasn’t stopped Ukraine from ramping up its drone strikes. On Sunday, a drone attack caused a huge fire at the Ust-Luga fuel terminal.
Russian officials confirmed the blaze. Separately, a fire at the Novoshakhtinsk refinery, also linked to drone activity, was still burning on Sunday. That facility normally processes around 100,000 barrels per day for export.
Even with these disruptions, Ole Hansen, head of commodity strategy at Saxo Bank, said their impact on supply is being balanced by OPEC+. The group has been slowly reversing its earlier production cuts and is now adding barrels back into the market.
Eight members of OPEC+ are meeting on September 7 and are expected to approve another production increase. That’s not the only market-moving event on the calendar. Federal Reserve Chair Jerome Powell signaled on Friday that the Fed might cut interest rates in September.
That’s given investors a boost in risk appetite. But not everyone’s optimistic. Priyanka Sachdeva, a senior market analyst at Phillip Nova, said both oil benchmarks still look flat. She added that markets believe Trump’s tariffs will eventually hurt global growth, which could slow down fuel demand.
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Source: https://www.cryptopolitan.com/gas-prices-surge-in-midwest/
