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Released August 30, 2022 | SUGAR LAND
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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--With fuel prices still contributing to the extraordinary levels of inflation in the U.S. economy, the federal government took action to ensure adequate supplies are available after BP's (NYSE:BP) (London, England) refinery in Whiting, Indiana, went offline.
An electrical fire last week prompted BP to close down part of its refinery situated along the southern shores of Lake Michigan. Whiting is the nation's sixth-largest refinery, processing some 400,000 barrels of crude oil per day. Those barrels account for about a quarter of the supplies of gasoline, jet fuel and diesel for Illinois, Indiana, Michigan and Wisconsin.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Refining Plant Database can click here for the plant profile.
To make matters worse, Marathon Petroleum Corporation's (NYSE:MPC) (Findlay, Ohio) 135,000-barrel-per-day (BBL/d) Detroit, Michigan, refinery is down for 30 days of planned maintenance. The refinery maintenance event is expected to last until September 13, IIR Energy reports.
On Saturday, the Federal Motor Carrier Safety Administration, part of the U.S. Transportation Department, waived a handful of rules to ensure those states have enough fuel.
"This declaration addresses the emergency conditions creating a need for immediate transportation of gasoline, diesel, and jet fuel and provides necessary relief," the department stated.
Closures at Whiting are not new, and they typically occur around the time when refineries are undergoing seasonal maintenance. But the issue is more of a concern this time around given the impact that high fuel prices are having on the economy.
Gasoline prices are up some 44% over the 12-month period ending in July, the last time the federal government updated its data on inflation, and fuel prices as a whole account for about half of the increase in all consumer prices. Year-on-year inflation is running red hot at 8.5%, a slowdown from previous highs but still a looming concern.
Click on the image at right for a look at the movement in U.S. retail gasoline prices.
It's so much of a concern that U.S. Federal Reserve Chairman Jerome Powell said the action necessary to cool inflation could be very painful for some U.S. households as credit becomes more and more expensive due to rising interest rates.
To be fair, commodity prices in general are lower than recent highs. The slight dip in overall inflation, from around 9% to 8.5%, was largely attributed to lower prices for crude oil and refined petroleum products, such as gasoline.
But Whiting's closure means the region will be unlikely to see any relief for the time being. With the end-of-summer holiday coming up, drivers in Michigan, for example, could see the highest Labor Day prices at the pump in 10 years.
"The impacts of the outage at the Whiting facility will be widespread across our region, and I am taking proactive steps to help Michiganders get the fuel they need to drive their cars and help businesses keep their products moving," Michigan Governor Gretchen Whitmer said.
Whitmer's order lifts restrictions on the amount of time that truck drivers can stay behind the wheel if they're delivering gasoline or diesel. That's in line with the guidance from the U.S. Department of Transportation.
States impacted by the outage at Whiting have yet to see a major uptick in the price at the pump. The region, however, usually posts prices above the national average, which was around $3.85 per gallon on Monday. Prices in Michigan are actually a bit lower than the national average, though drivers in Illinois are paying more than $4 per gallon.
By comparison, motorists along the southern U.S. coast, home to a dense network of refineries, are enjoying considerable relief compared with the rest of the nation. Drivers in Texas and Louisiana have the lowest state average price in the nation at $3.37 per gallon.
But that too could change. There are three storms brewing in the Atlantic and at least one of them could form into the first major hurricane to threaten PADD 3, home to not only a dense network of refineries, but most of the nation's crude oil and natural gas. Shipping lanes too could be impacted by the weather.
The federal government reported that the average retail price was $4.56 per gallon in July, the highest national average for a gallon of regular unleaded since at least 2008. Federal forecasters expect a national average of $4.29 during the third quarter, though that drops off to $3.78 per gallon by the end of the year.
Even that's elevated. The average price at the pump this time last year was $3.19 per gallon. And in late August 2019, to discount the impact of the COVID-19 pandemic, the price was even lower--$2.83 per gallon.
Improved fuel efficiency for conventional vehicles and incentives to buy hybrids or electric vehicles could alleviate some of the pain at the pump. And a few weeks after the Labor Day holiday weekend, refiners can start making the so-called winter blend of gasoline, which is cheaper to produce and yields lower prices at the pump.
But "lower" is a relative term. Extraordinary events such as the war in Ukraine and remaining supply-chain bottlenecks could mean that, just like crude oil prices, gasoline prices are in a higher-for-longer climate.
Federal and state waivers in response to the Whiting refinery outage expire in mid-September. BP said it expects to conduct a phased approach to resuming full operations at the refinery before the end of August. IIR Energy reported Monday the 110,000-BBL/d fluid catalytic cracking unit (FCCU) 500 was expected to begin restart sometime within a 24-hour-period, followed by the restart of the 65,000-BBL/d FCCU 600.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
An electrical fire last week prompted BP to close down part of its refinery situated along the southern shores of Lake Michigan. Whiting is the nation's sixth-largest refinery, processing some 400,000 barrels of crude oil per day. Those barrels account for about a quarter of the supplies of gasoline, jet fuel and diesel for Illinois, Indiana, Michigan and Wisconsin.
Subscribers to Industrial Info's Global Market Intelligence (GMI) Refining Plant Database can click here for the plant profile.
To make matters worse, Marathon Petroleum Corporation's (NYSE:MPC) (Findlay, Ohio) 135,000-barrel-per-day (BBL/d) Detroit, Michigan, refinery is down for 30 days of planned maintenance. The refinery maintenance event is expected to last until September 13, IIR Energy reports.
On Saturday, the Federal Motor Carrier Safety Administration, part of the U.S. Transportation Department, waived a handful of rules to ensure those states have enough fuel.
"This declaration addresses the emergency conditions creating a need for immediate transportation of gasoline, diesel, and jet fuel and provides necessary relief," the department stated.
Closures at Whiting are not new, and they typically occur around the time when refineries are undergoing seasonal maintenance. But the issue is more of a concern this time around given the impact that high fuel prices are having on the economy.
Gasoline prices are up some 44% over the 12-month period ending in July, the last time the federal government updated its data on inflation, and fuel prices as a whole account for about half of the increase in all consumer prices. Year-on-year inflation is running red hot at 8.5%, a slowdown from previous highs but still a looming concern.
Click on the image at right for a look at the movement in U.S. retail gasoline prices.It's so much of a concern that U.S. Federal Reserve Chairman Jerome Powell said the action necessary to cool inflation could be very painful for some U.S. households as credit becomes more and more expensive due to rising interest rates.
To be fair, commodity prices in general are lower than recent highs. The slight dip in overall inflation, from around 9% to 8.5%, was largely attributed to lower prices for crude oil and refined petroleum products, such as gasoline.
But Whiting's closure means the region will be unlikely to see any relief for the time being. With the end-of-summer holiday coming up, drivers in Michigan, for example, could see the highest Labor Day prices at the pump in 10 years.
"The impacts of the outage at the Whiting facility will be widespread across our region, and I am taking proactive steps to help Michiganders get the fuel they need to drive their cars and help businesses keep their products moving," Michigan Governor Gretchen Whitmer said.
Whitmer's order lifts restrictions on the amount of time that truck drivers can stay behind the wheel if they're delivering gasoline or diesel. That's in line with the guidance from the U.S. Department of Transportation.
States impacted by the outage at Whiting have yet to see a major uptick in the price at the pump. The region, however, usually posts prices above the national average, which was around $3.85 per gallon on Monday. Prices in Michigan are actually a bit lower than the national average, though drivers in Illinois are paying more than $4 per gallon.
By comparison, motorists along the southern U.S. coast, home to a dense network of refineries, are enjoying considerable relief compared with the rest of the nation. Drivers in Texas and Louisiana have the lowest state average price in the nation at $3.37 per gallon.
But that too could change. There are three storms brewing in the Atlantic and at least one of them could form into the first major hurricane to threaten PADD 3, home to not only a dense network of refineries, but most of the nation's crude oil and natural gas. Shipping lanes too could be impacted by the weather.
The federal government reported that the average retail price was $4.56 per gallon in July, the highest national average for a gallon of regular unleaded since at least 2008. Federal forecasters expect a national average of $4.29 during the third quarter, though that drops off to $3.78 per gallon by the end of the year.
Even that's elevated. The average price at the pump this time last year was $3.19 per gallon. And in late August 2019, to discount the impact of the COVID-19 pandemic, the price was even lower--$2.83 per gallon.
Improved fuel efficiency for conventional vehicles and incentives to buy hybrids or electric vehicles could alleviate some of the pain at the pump. And a few weeks after the Labor Day holiday weekend, refiners can start making the so-called winter blend of gasoline, which is cheaper to produce and yields lower prices at the pump.
But "lower" is a relative term. Extraordinary events such as the war in Ukraine and remaining supply-chain bottlenecks could mean that, just like crude oil prices, gasoline prices are in a higher-for-longer climate.
Federal and state waivers in response to the Whiting refinery outage expire in mid-September. BP said it expects to conduct a phased approach to resuming full operations at the refinery before the end of August. IIR Energy reported Monday the 110,000-BBL/d fluid catalytic cracking unit (FCCU) 500 was expected to begin restart sometime within a 24-hour-period, followed by the restart of the 65,000-BBL/d FCCU 600.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
