EIA: Midwest refinery outages increase regional gasoline prices

On 15 July, ExxonMobil’s Joliet refinery outside of Chicago, with 251 800 bpd of capacity, was shut down on an emergency basis in response to a power outage brought on by severe weather conditions. The shutdown took the refinery offline for several weeks before it could safely resume operations. Operators reported they had begun bringing the facility back online as of 8 August, and later reports have since indicated that the Joliet facility has resumed normal operations.

In Ohio, operators also reported temporary unit shutdowns at Cenovus’s 183 000 bpd Lima and 150 800 bpd Toledo refineries. Since the week ending 12 July, just before the Joliet outage, to 9 August, Midwest refinery utilisation decreased 11 percentage points to 86% because of the outages, reducing refinery production of gasoline, diesel, and other refined petroleum products. As these refineries reentered service, Midwest refinery utilisation increased more than 10 percentage points the following week, to 97% as of 16 August.

Lower refinery utilisation means refineries produced less gasoline, which has resulted in noteworthy draws on Midwest gasoline inventories. In the week ending 19 July, immediately after the Joliet outage began, Midwest gasoline inventories drew down by 2 million bbl, falling below 2023 levels and the five-year (2019 - 2023) low.

Through 9 August, weekly inventory data show that Midwest gasoline inventories remained at about 46 million bbl, between 4% and 7% below the five-year average, depending on the week. The return of these refineries to service contributed to regional gasoline inventories increasing 1.3 million bbl the week of 16 August. Nonetheless, below-average inventories have put pressure on Midwest gasoline prices.

Retail gasoline prices in the Midwest are typically lower than the US average because of production from local refineries and lower regional fuel taxes. However, the average retail gasoline price in the Midwest has been within 1% of the US average for three consecutive weeks following the outages, according to the EIA's Gasoline and Diesel Fuel Update.

The recent retail price increase in the Midwest marks the closest the regional average retail price has been to the national average since November 2022. In Chicago, where the impact of the refinery outages is even more pronounced, average retail gasoline prices were more than 20% higher than the US average for the three-week period from 22 July to 5 August. On 29 July, Chicago retail prices averaged 23% higher than the US average retail price, the largest percentage price premium for the city in any week since 2015.

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