Metro Detroit gas prices inching back toward $4
July 3, 2011 – 11:26 pmAfter weeks of falling prices at the pump, $4-a-gallon gas returned to Metro Detroit this week.
By late afternoon Tuesday, prices across Metro Detroit ranged from $3.99 to $4.05 a gallon, according to the Michigan GasBuddy.com website, which publishes gas station prices from volunteer spotters. Gas prices in the Metro region and statewide surged 20 cents during the past week, settling Tuesday at an average of $3.77 a gallon in Metro Detroit, AAA Michigan said.
The recent rise is being fueled by refinery problems in Ohio and Indiana as well as concern that the Organization of Petroleum Exporting Countries will cut oil production, said Patrick DeHaan, the Grand Rapids-based senior petroleum analyst with GasBuddy.com. Oil accounts for as much as 80 percent of the price of gas.
Fears of international supply shortages raised the price of oil as high as $97.48 a barrel Tuesday on the New York Mercantile Exchange and could soon push pump prices throughout Michigan past the critical $4-a-gallon threshold, DeHaan said.
“Market sentiment has changed,” he said. “Now, a lot of people believe prices are going up.”
Speedway, a subsidiary of Findlay, Ohio-based Marathon Petroleum, led the price increase in the region, selling gas at $3.95 a gallon at several of its Metro Detroit stations.
“Prices go up and down quite a bit,” said spokesman Shane Pochard.
“The biggest factor is the price of oil itself. The other reason is we’re in the middle of the summertime driving season, when demand goes up.”
Motorist Alexo Thuwaini spent $84 Tuesday afternoon at the Speedway station on 15 Mile and Ryan roads in Sterling Heights to fill the tank of his pickup. Thuwaini, the owner of Sterling Heights-based Champion Towing, said he fills his tank twice a week, usually at $100 a pop.
“I think it’s ridiculous,” he said. If prices keep going up, “then I’ll lose everything. I can’t afford it.”
Oil and gas prices nationwide slumped briefly late last month after the decisions of the U.S. government and International Energy Agency to release about 90 million barrels of oil combined from their reserves, but the relief for Great Lakes motorists was short-lived.
Worldwide demand for oil will drive prices higher, according to a Goldman Sachs analyst report released Friday.
“In our view, it is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand, keeping it in line with available supply,” the report said.
In Metro Detroit, gas fell to a low of $3.55 on June 28 before peaking at $3.78 on Sunday and Monday.
The average fell a penny to $3.77 a gallon Tuesday.
A 150,000-barrel-a-day refinery in Lima, Ohio, owned by Husky Energy Inc. has been shut to repair a leak in a furnace, the company said in a press release. And BP’s Whiting, Ind., refinery is reportedly having an emissions issue.
These are the latest in a string of problems at oil refineries across the Midwest, particularly in Illinois.
ExxonMobil Corp. reported several problems in late June and on July 1 at its Joliet, Ill., refinery, including flaring and a furnace outage. A power outage slowed production late last month at ConocoPhilips’ 306,000-barrel-a-day Wood River Refinery in Roxana, Ill., according to Dow Jones Newswires.
“The Midwest has presented the greatest price roller coaster in 2011, so Great Lakes’ folks might be particularly bipolar these days,” Tom Kloza, chief oil analyst with Wall, N.J.-based Oil Price Information Service, wrote in his Speaking of Oil blog.
But “this is not the return to $4 a gallon gasoline,” said Kloza, who expects gas prices nationwide to range between $3.25 and $3.75 in July and August. “You guys could see both extremes.”
Tags: Metro Detroit, Prices