That’s more like it! Detroit area gas prices plunge
Gas prices in Metro Detroit are falling Tuesday after BP announced it safely restarted a portion of a large Indiana oil refinery that unexpectedly shutdown earlier this month.
Average gas prices in Detroit were $2.25 Tuesday evening, according to GasBuddy.com.
“It’s just a matter of time before we start to see gas prices under $2 in Indiana, Michigan, Illinois and Ohio,” said Patrick DeHaan, senior petroleum analyst for the gas price website.
BP issued a news release Tuesday saying it had safely restarted a large crude distillation unit at its refinery in Whiting, Indiana, 15 miles southeast of Chicago, that had been shut down since Aug. 8 for unscheduled repair work. BP says the restart of the unit is increasing the refinery’s fuel production, with output ramping up over time.
DeHaan said gasoline prices in Michigan, Indiana, Illinois, Ohio, Wisconsin and neighboring states served by the refinery could fall 20 to 50 cents a gallon over the next two weeks as long as no new problems develop.
“With the return of this BP refinery, so long as there are no new outages from it, I would expect it’s just a matter of a couple of weeks or a couple of months before we see the first stations at under $2 a gallon,” DeHaan said. “The Whiting refinery was the only kink in the chain from delivering far-lower gasoline prices.”
Regardless of falling prices, Illinois officials are asking the Illinois Petroleum Council for an explanation of the steep price hikes in the Chicago area during the refinery’s shutdown given that crude oil prices were at an all-time low.
DeHaan said average prices in Metro Detroit have dropped to within 16 cents of the average prior to the spike.
The sudden shutdown earlier this month sent average gas prices in Detroit soaring, from $2.50/gallon Aug. 11 to its peak at $3.03/gallon Aug. 15, DeHaan said.
“Prices have been slowly gaining downward momentum after that date,” he said. “The balloon has been deflating.”
A spike to remember
The 53-cent-per-gallon spike over just four days was significant, said DeHaan, who has studied gas prices since 2004.
“It was probably one of the largest, fastest increases that I’ve seen as a petroleum analyst,” he said. “And more than half the gain has already come off.”
Attorney General Bill Schuette on Tuesday praised the refinery restart.
“I am pleased to see the BP Whiting crude refinery is up and running,” Schuette said in a statement Tuesday. “With this news, I expect to see a reduction in gas prices across Michigan very soon.”
Dropping gas prices are expected to continue through the fall, DeHaan said. Some Michigan stations could post prices less than $2/gallon by Halloween, with the statewide average dropping to that level by Christmas.
“Overall, the trend remains downward,” DeHaan said.
Despite the recent spike, gas prices have remained significantly lower than last summer, said Susan Hiltz, public affairs director at AAA Michigan.
“I know we kind of had that speed bump in the gas road where they increased, but they’re still substantially lower than last year,” she said.
‘Should be some good news’
The Dearborn-based auto club said as of Sunday, the average price of self-serve regular unleaded gasoline is about 66 cents less than at the same point a year earlier.
It’s all good news for Labor Day travelers, Hiltz said.
An estimated 1.18 million Michigan people are expected to travel over the holiday, close to a 1.5 percent increase over last year. Of those travelers, more than one million people are expected to drive to their vacation locations, Hiltz said.
“Definitely the refinery getting back up and running will have a positive affect and hopefully help drive the (gas) prices lower,” Hiltz said. “Typically during the last hurrah of summer, we see an increase in travel and the lower gas prices will be a plus for travelers.”
Along with the repaired refinery, lower crude oil prices and a decrease in travel after Labor Day could contribute to dropping prices through the fall, Hiltz said.
“We’ll keep our fingers crossed on that,” she said. “There should be some good news for Michigan motorists.”
U.S. crude oil prices rebounded on Tuesday to $39.31 a barrel after trading Monday at a six-year-low of $38.24, plummeting from more than $100 a barrel last summer. The U.S. has ramped up oil production to historic levels over the last few years while OPEC continued to churn out crude. Supplies have built up and growth in the world economy has been slow, resulting in a supply glut that has punished oil prices
Associated Press contributed.