BP said Tuesday that it has restarted the largest of the three crude distillation units at its Whiting refinery, located 15 miles southeast of Chicago. It was shutdown on Saturday, August 8, due to leaking tubes on a piece of equipment. The unexpected shutdown caused gasoline prices in the region to skyrocket over the past almost two weeks.
“Restart of this unit is increasing the refinery’s fuel production, with output ramping up over time,” BP said in a statement.
The shutdown at the largest refinery in the US Midwest disrupted markets throughout the region, with oil in Alberta and Oklahoma falling and gasoline in the Midwest rising. The shutdown placed additional oil onto an already saturated market and cuts gasoline supply to the Midwest in the middle of peak summer demand. This helped push heavy Canadian crude to trade at the lowest level in a year and has sent wholesale gasoline in Chicago soaring to its highest level since 2013.
BP’s Whiting Refinery can process as much as 270,000 bpd of heavy crude sent via pipeline from Alberta, with additional supply sent up from Cushing, Oklahoma. The shutdown caused the refinery to operate at less than half its capacity.
BP continued to fulfill its contracts with wholesalers and gas stations. However, it did not have additional gasoline to sell to the open market. This prompted a bidding war between wholesalers without contracts. These higher costs rapidly were translated to higher retail prices. Gas stations passed along some of these higher costs to consumers.
According to the EIA, last week retail gasoline prices in the Midwest region experienced the largest weekly rise since the 2005 aftermath of Hurricane Katrina. Since then, wholesale prices have declined. However, retail gasoline prices in the Chicago area continue to be approximately $0.70 higher than the national average. In Chicago proper, gasoline prices are almost $1 more than the rest of the US, according to AAA’s Daily Fuel Gauge Report.
BP’s Updated Statement On Whiting
“BP has safely restarted a large crude distillation unit that had been shut down since Aug. 8 for unscheduled repair work.
Restart of this unit is increasing the refinery’s fuel production, with output ramping up over time.
The rest of the refinery continues to operate safely.
In the meantime, the company continues to meet its contractual fuel supply obligations.”