Local gas prices expected to increase as much as 30 cents due to refinery power outage
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Gas prices may be subject to rise following a power outage Thursday at a BP (NYSE:BP) oil refinery located in Whiting, Indiana. The outage has apparently led to excess burning and fairing at the site, burning off some product.
BP stated the facility systems should be restarted on Friday morning, though it’s unclear whether this has proven true.
“Out of an abundance of caution, BP has evacuated the employees from the Glass House located on Indianapolis Boulevard and 129th Street. No further evacuation is required,” the release read.
Smoke stemming from the refinery could be seen across the town of Whiting, resulting in cautionary measures being taken for the people living there. This includes air quality considerations.
“There was continual monitoring of air quality at multiple points around the refinery by BP and Lake County Hazmat since the incident occurred,” a statement from the city read. “The testing has shown that there was no danger to the public as a result of today’s incident.”
Apparently, the people of Whiting are used to incidents like this. However, the larger-than-average amount of smoke and fire has proven alarming to at least some residents.
“I seen the workers evacuating, and that was my first concern obviously… public safety in the community,” Resident Zach Spencer told ABC7 Chicago. “Definitely a little odd. Then the black smoke started to get pretty heavy.”
What Does the Whiting Refinery Power Outage Mean for Gas Prices?
While the closure of a single refinery shouldn’t play too much of a role in national fuel costs, the incident may actually push local gas prices upwards. Indeed, some Chicago drivers are expecting some blowback in terms of the cost of gas stemming from the refinery’s closure.
Perhaps reasonably so, the Whiting refinery produces roughly 440,000 barrels of oil a day.
“I think for now gas prices could jump from 15 to 30 cents a gallon over the next couple of days,” noted Gas Buddy’s Patrick De Haan. “This refinery produces nearly 10 million gallons of gasoline every single day, so with this refinery basically down for the count not producing, it’s going to be a very swift and quick impact to the price that you pay at the pump.”
AAA reported that gas prices have started to rise recently, but this is due to seasonal factors.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.