Diesel in Midwest could soon reach $7 after refinery issues
(The Center Square) – An Exxon Mobil fuel refinery southwest of Chicago went offline over the weekend, causing a halting of production and driving already heightened fuel costs even higher for Midwestern motorists, who likely won’t see prices ease until days later.
The cost for a regular gallon of fuel in Illinois was $4.53 Tuesday, up nearly 5 cents from Monday and up roughly 23 cents in the past week.
Meanwhile, Michigan, Wisconsin and Minnesota were among the top five highest price increases for regular fuel in the past week.
A full power outage lasting roughly three and a half hours at the Exxon Mobil refinery in Joliet resulted in a production shutdown Sunday.
According to Patrick De Haan, head of petroleum analysis for GasBuddy, after the shutdown, some emergency flaring of fuel continued through Monday morning, and bringing the whole site back online could take a few more days – with gas prices lagging behind.
“Flaring was pretty active Sunday. Some of that flaring continued into Monday, and now as the refinery likely reduces flaring, it likely will begin a restart process – which may take several days. There may be safety and damage assessments that have to be done,” De Haan said.
He said the power loss at the scale the refinery experienced is relatively rare, and it “seems like a utility issue.”
According to AAA fuel data, diesel reached record highs Tuesday across the region – with Michigan at $6.26 per gallon, Illinois and Indiana at $6.22 per gallon, and Wisconsin at $6.10 per gallon – surpassing the all-time highs recorded this spring.
“Both regionally and nationally we’ll likely continue to see diesel going up. Again, there’s a lot of issues currently contributing to upward pressure in diesel prices, while those increases could be even further enhanced in the Midwest,” De Haan said, in reference to the ongoing Middle Eastern and Russia-Ukraine conflicts.
De Haan said the region’s Great Lakes states have the potential to see diesel hit $7 per gallon in coming days, though less likely in Wisconsin because of its lower tax rates on fuel.
“We could see some states in the Great Lakes, where this refining power outage happened, that could see diesel prices even higher. They could approach $7 a gallon at some stations in the next week or so,” De Haan said.
He said there’s also a potential for average diesel prices nationally to surpass 2022 highs of $6.58 per gallon, adjusted for inflation.
Aside from the Joliet outage, De Haan said reports of the BP refinery in Whiting, Indiana undergoing planned maintenance have been misstated, and are not contributing to reduced capacity.
The Whiting refinery is also experiencing a labor dispute with United Steelworkers Local 7-1, representing refinery workers. BP and the union held negotiations Monday and agreed to meet again this week to further discuss updating union employee contracts.
BP said in a media release Monday the dispute isn’t impacting operations.
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