WASHINGTON, May 26 (UPI) — Lower-than-normal inventories and refinery work means consumers in the U.S. Midwest are facing higher-than-average gasoline prices, the Energy Department said.
The U.S. Energy Department’s Energy Information Administration said Midwest gasoline prices have been on the rise since mid April.
“Higher gasoline prices in the Midwest largely reflect supply constraints stemming from decreased refinery runs and lower-than-normal gasoline inventories,” the EIA said. “Refinery utilization in the Midwest has fallen steadily since the start of 2013 and is now about 83 percent of capacity, below the U.S. average of 87 percent.”
The EIA said consumers in Minnesota were hardest hit, with gasoline prices as of May 20 at $4.29, more than 60 cents higher than the national average for a gallon of regular unleaded.
Gasoline prices in general have increased for the week of May 20 as U.S. consumers prepare to travel for the Memorial Day holiday. Motor group AAA reports the average national price for Friday was $3.65 per gallon, 4 cents higher than last week.
The EIA reports that U.S. consumers should pay about $3.53 for a gallon of regular unleaded gasoline this summer, down from last year’s average.
Further north, the Canadian National Energy Board reports that consumers should be about the same for gasoline as they did last year, with a summer average between $4.38 per gallon and $4.68 per gallon.
Copyright 2013 United Press International, Inc. (UPI).
Gas goes up whrn the market determines you’ll use most of it. If you clowns would just stay around town on the 4rth we’d all spend less for gas. But no, you’ve gotta burn fuel in da summer!
many people including myself drive long distances for a living. We cant just stay home. But yo are saying the same as me when the price goes up at certain times of the year. If the companies cant keep a certain level of reserves then they are stupid or smart enough to gouge us.
“who is refining the oil? who is in charge of inventories?”
As I have explained before, there are many layers of companies that control the supply and distribution of petroleum products.
For the week, the EIA reported weekly supplies of gasoline ending 17May13 at 47.6mmbl. That compares to 47.8mmbl 10MAY13, and 48.5mmbl 18MAY12. This includes stocks in pipelines in-transit, customs cleared stocks, and at refineries, bulk terminals.
Net production this week was 2,240mmbl, last week 2,230mmbl, and last year 2,284mmbl, again just in the Mid-West.
Okay, that’s the numbers end of it. Citation are available upon request.
Now let us look at the mechanics of it. As I made mention, the largest Mid-Western refinery was in Whiting, IN. They have been expanding their heavy crude line for the past year to increase production. The current outage has been planned for quite some time (I have been reading about it for over half a year). That I am aware of, no production facility runs 24/7 365 days a year without the need to maintain it, much less to expand it.
Of course they have always used mostly heavy crude from S. IL, Cushing, OK, and Alberta. (Cushing has a huge price disadvantage these days compared to Canadian WCS) They do consume light crude, but those sources are in Cushing. And that Canadian crude comes from other oil companies, Suncor, Husky, and COS, not BP. Same with the IL crude.
Once those products are produced, it is sold and leaves the refinery via pipelines, going to Racks and storage facilities all over the Mid-West.
That gets me to the last part of the puzzle. Who gets what?
For every gallon of gasoline, on average in the U.S.:
·12% is Taxes
·11% is Distribution/Marketing
·12% is Refining
·65% is the price of Crude.
Back to the case of BP in Whiting, how does one make the case of being rich oil fat cats when they only make 12% of every gallon of gas?
“I call it price fixing but 50 miles is right. Who controls the inventories? The oil company’s and they reduce them when they get bigger that they want to drive the price down.”
“this sounds to me like an excuse how the (gas companies) can “rig” the price of fuel. who is refining the oil? who is in charge of inventories? It all comes down to some of the top 5 profitable businesses last year.”
So all the refiners get together and “conspire” to control inventories?
“They also control the refinery’s and are the ones in charge of when they are going to shut them down for maintenance.”
Not entirely true. The maintenance shutdowns are usually planned well in advance to insure availiblity of parts and contractors (who move from refinery to refinery). Breakdown of equipment may also force a maintenance shutdown, depending on the machinery involved. EPA operatig requirements may also force a refienry to shutdown for repair.
Also remember that at this time of year most refineries are changing fuel blends from winter to summer. Add to that a product that can degrade overtime; sometimes the refineries guess wrong, on shutdowns and inventories.
I call it price fixing but 50 miles is right. Who controls the inventories? The oil company’s and they reduce them when they get bigger that they want to drive the price down. They also control the refinery’s and are the ones in charge of when they are going to shut them down for maintenance.
“Higher gasoline prices in the Midwest largely reflect supply constraints stemming from decreased refinery runs and lower-than-normal gasoline inventories,”
this sounds to me like an excuse how the (gas companies) can “rig” the price of fuel. who is refining the oil? who is in charge of inventories? It all comes down to some of the top 5 profitable businesses last year.