We’re hearing more bad news from a different refinery this time. Valero
has announced that problems at Houston refinery have shut 130,000
barrels of refining per day. The profit for turning one barrel of crude
into 2 parts gasoline and 1 part distillate is now $30.20, the highest
since 1989, and $10 more than just a few weeks ago. Refiners that are
up and running are producing as much fuel as possible to enjoy this
huge profit, and refiners that are down are suffering large losses. The
only good part about this is that refiners are trying to get their act
together as soon as possible.
We still have 8% less gasoline in storage than a year ago.
I checked out rack prices across the midwest and it seems that prices
have jumped anywhere from 4 cents in some areas of Wisconsin to 15
cents in Minnesota. Due to the bad refinery news, prices are jumping on
the wholesale market, which will trickle down to the rack, and cause
higher rack prices.
We could see a hike to $3.59 or even $3.65 Friday or early next week depending on what happens.
Midwest gasoline prices are at a premium compared to other areas, we’re
paying some 50 cents per gallon over what wholesale prices are in the
Gulf. Its legit unfortunately because of refinery problems. To paint a
better picture, let me help explain:
32% of Ohio’s capacity was shut by the one refinery (the one that plans to be back online this weekend), 95% of
Indiana’s capacity was shut by one refinery, leaving Michigan’s smaller
100,000 barrel plant and Wisconsin’s TINY 34,300 barrels the only
gasoline production in those 4 states.
With demand increasing still over last year, you see why these refinery shut downs are making gasoline so much more expensive?
Look for the hike to around $3.59-$3.65 either tomorrow or early next week.
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