Analyst says refining issues behind gas price spike - Fox 28: South Bend, Elkhart IN News, Weather, Sports

Analyst says refining issues behind gas price spike

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  • Gas Buddy

    Gas Buddy

    Gas prices draining you?  Visit the Fox28.com Gas Buddy to find the lowest fuel prices in the area.More >>
    Gas prices draining you? Head to the FOX28 Gas Buddy to find the lowest prices in your area.More >>

Michiana driver are feeling the pinch of some of the highest gas prices in the country. Many stations raised their prices to $4.29 a gallon for regular Monday afternoon.

As of midday Tuesday, GasBuddy.com said the current average price in the South Bend area is $4.12 a gallon, well above the national average of $3.63 a gallon.

"We've seen some refining issues cause the price of gasoline to go up significantly," said Patrick DeHaan, Senior Petroleum Analyst with GasBuddy.com. "This has developed in the last week or so."

The refining issues at several refineries in the region came during a time of the year when stockpiles are generally low due to the switch to summer blends in early May.

"The problem this year was supply was very tight, as it usually is, but now we seemingly are affected by scattered refining outages that are making production of that summer gasoline more difficult and supply is growing even tighter than it was before," said DeHaan. "The laws of supply and demand dictate that once supply drops, and in this case demand remains constant, that prices escalate, and that's what's occurring."

Many drivers are asking how prices can be so high even though the price of crude oil remains relatively steady, trading around $92-93 a barrel.

"Americans are obsessed, and perhaps I'm obsessed too, with looking at the price of oil," said DeHaan. "But, there's not always a direct connection between the change in the price of oil and gas prices, as we saw this week. The big step that a lot of Americans are missing as they look at oil prices is they're not filling up with oil, they're filling up with something that is refined from oil. And it's that refining bottleneck, that refining wildcard, that leads the prices to be disconnected from the value of oil."

DeHaan says the high prices will make it lucrative for refineries in other regions to start shipping their gas to the Great Lakes region, ultimately increasing supply. He also expects the high prices to curb some demand. DeHaan says those factors, along with fixing the issues at other refineries, will eventually lead to lower prices, though it could take a few weeks.

"It could be a week, 2-3 weeks before we see prices that are notably lower," said DeHaan.

You can always find the lowest gas prices using GasBuddy on FOX28.com.

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