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U.S. Midwest hit by Perfect Gasoline Storm

By Daniel J. Graeber | Mon, 06 August 2012 22:24 | 5

Retail gasoline prices in the U.S. Midwest were as much as 50 cents higher than in the rest of the country. By Monday, the price of a gallon of regular unleaded jumped 13 cents from last week in Detroit to settle at $3.99.  The spike in retail gasoline prices follows a series of pipeline spills in Wisconsin and refinery shutdowns in Chicago and elsewhere. The impact of the string of industrial incidents on consumers in the region may be short-lived, but retail prices rarely decline as fast as they increase.

The American Automobile Association, in its daily gasoline report, states a gallon of regular unleaded gasoline in Detroit cost $4.05, up from the $3.69 average just one week ago. Chicago drivers, meanwhile, were paying on average $4.39 per gallon, a 10 percent increase from last week. According to AAA, the national average for a gallon of regular unleaded is $3.62.  While that's a far cry from the national spikes early this year, the regional blow has irked many area residents wary of high consumer prices and pipeline incidents.

An industry analyst said much of the region was hit by "a cluster of bad luck." Last month, pipeline company Enbridge reported a leak on a pipeline in Wisconsin. A section of the Lakehead oil pipeline system ruptured there, cutting off oil supplies to Chicago-area refineries. U.S. Transportation Secretary Ray Lahood said the incident was "absolutely unacceptable" and forced Enbridge to keep the line closed until authorities review a restart plan for the entire 467-mile pipeline.

In Michigan, the state's governor last month issued a fuel emergency in response to the rupture of pipeline that released 1,000 barrels of unleaded gasoline in eastern Wisconsin. Gov. Rick Snyder's emergency declaration lifted the restrictions placed on long-haul truckers so they could deliver retail petroleum products. Less than two weeks later, Enbridge confirmed that 1,200 barrels of oil spilled from Line 14 in central Wisconsin. A nearby resident said the pipeline "blew like an oil well."

Enbridge maintains that "better than 99.999 percent" of the time, there are no problems with its vast network of oil pipelines in the United States. When accidents do happen, however, they're costly. Last year's oil spill in Michigan, on the same network as the Wisconsin leak, was the costliest onshore incident in U.S. history and EPA authorities are still reporting sheen in some of the waterways soiled by the release. Refineries, meanwhile, have shut down at a time when the region is using "summertime gasoline," a blend not manufactured very much outside of the Midwest.

Patrick DeHaan, a petroleum analyst at reporting Web site gasbuddy.com, told a Chicago newspaper that the regional spike in gasoline prices is temporary and likely "the last hiccup" for the summer. Nevertheless, gasoline prices rarely experience a 10 percent decline overnight.

"As we all know, (retail prices) only move down by pennies per day," he said.

By. Daniel Graeber of Oilprice.com

About the author

Contributor
Daniel J. Graeber
Company: Oilprice.com
Position: Senior Analyst

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  • Hans Nieder on August 06 2012 said:
    Excellent thread, Mr Graeber! We did see a general spike lee in the past month, as goo climbed by some 14 dollars per barrel...
  • norman crouch on August 07 2012 said:
    The big oil companies are a rip off to all of the American people and are a bunch of damn greedy hogs to corn.When they want more money toput into their rich bank accounts & CEO's bigger bonuses they jack the price of gas up so they can steal from the working people & hurt the Senior Citizens of Ameria.I would like to see all of the greedy King Pharoahs lose their asses in stock because they are so greedy.Cut the big boys out of their big $1,000,000.00 or more year paychecks and close down the stupit IRS Dept as well as keeoing the lobbist out of all the government building as well as Wall Street by closing the doors and firing all the rich boys from their jobs and put all of them out on the street where all the other working class people are at and cut all of the elected officials paychecks in half for all of the damn partime work they do in Washington and fire Obama from the White House as well as all of his greedy Cabnit he has stealing money fro the Seniors * worling class people of America.between the high rise of the Saudi Aruab's liquid gold they call oil then America should charge them as well as all of the cheap other countries that they steal from the Americans for all of the goods thaey get from American people.Close down Wall Street now and stop all of the greedy Lobbist & spectors from even going near any elected offical by beating the hell out of them if that is what it takes.
    We have enough natural rescources here in America as well as dmn oil that we don't need foreings crap.the government & oilk companies has too much of a hold here in America and something needs to be done about it.Start drilling here in America & building new refinies as well as starting up lotos of the close ones the greedy oil companies shut down by using excuses like a bunch of damn whinning babies we don't have this or we want more mory in our pockets & bank accounts for we are going broke.BS is all the oil companies and Federal Government are.America is already a Third World Country ever since Obama took office for he keeps putting the American people into more & more debt withall of the lies he is feeding the blacks & illeagl mexicans that he is giving amnesty to everyday and turning our own border protrol into running babies.We don't want or need Dictatorship or Socialism here in America.Turn our Military back into the roaring Lion we use to be intead of turning tail and running like our government and big business are forcing them to do.Every American should stop buying oil from all of the Major oil companies & gas staions for a year and let's see how much money all the big rich greedy boys can make and pocket and put in their rich bank accounts like they are dooing right now everyday here in America.
    The time to stand up and protest is now not tomorrow but now today.
    Thank you and may God speed and help the workingclass & Senior Citizens of American.
  • Duane Stephens on October 11 2012 said:
    Mr. Nieder

    You need to take a pill sir. Much of your article is mindless babel. Before you start attacking oil and gas companies you need to get your facts straight.

    Major Oil and Gas Companies only make a 3 to 5 % ROI on their business. Almost all companies expect a 10% or higher rate of return on their business.

    Major Oil Companies make very little profit on gasoline. The majority of gas prices are state and federal taxes. Very little portion goes to oil companies.

    Major Oil Companies invest in hundreds of new and innovative energy programs for America. The molecule of oil is responsible for two million products that the world uses.

    Now why don't you go get into your big SUV and see a doctor about your problem.

    Have a great day.

    Duane Stephens
  • glen on December 01 2012 said:
    Exxon Mobil had the largest profits of the Big Five oil companies in 2011, raking in $41.1 billion for the year. This 35 percent jump from last year is driven in large part by record-high oil prices. Today, the oil giant announced its fourth quarter profits of $9.4 billion, a 2 percent increase since 2010. Here are a few other facts about Exxon Mobil:

    – Exxon’s $41.1 billion in 2011 profit translates into nearly $5 million in profit every hour, or more than $1,300 every second. The annual profit comes near the record revenues of $46.23 billion in 2008.
  • nunyac on June 11 2013 said:
    I am woudering if high gas prices in the Midwest are the result of a plan by Barak bin Laden to reduce carbon emissions using the same strategy that he used to reduce ammunition sales in the US (raising the price).

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