Partial shutdown of Indiana refinery pushing Colorado Springs gasoline prices higher

Despite the price of oil going down, gas prices in Colorado Springs have been going up. (Jerilee Bennett/The Gazette)

Oil prices are falling globally, yet gas prices are rising in Colorado Springs and elsewhere.

What's going on?

Blame a partial shutdown of a major refinery in Indiana earlier this month and production problems at a refinery in Texas last month for gas prices heading in the opposite direction from oil prices. As a result, drivers in the Springs, the rest of Colorado and several neighboring states have been paying higher prices at the pump in recent weeks, according to Will Speer from GasBuddy.com, a website that tracks prices in the United States and Canada based on information relayed from motorists.

"It is pretty ugly," Speer said.

The average price for a gallon of unleaded regular gasoline in Colorado Springs was $2.80 Monday, the highest in nearly nine months and up 8.5 cents a gallon from a week ago, according to GasBuddy.com. Local prices have risen 14.2 cents in the past month and more than $1 a gallon since hitting the year's low point on Jan. 19.

Yet oil prices fell last week to a 6½-year low of $41.35 amid concerns of slowing economic growth in China, a huge oil consumer, and strong global production, the Associated Press reported.

Gasoline prices are surging as a result of the Aug. 8 partial shutdown of BP's refinery in Whiting, Ind. - the largest in the region and seventh largest in the nation. Piping in a 2-year-old expansion of the refinery was damaged by a malfunction and repairs could take a month or two to complete, Reuters reported last week.

"This incident took half of the refinery's production off line and initial reports indicate it will be down for one or two months. It is similar to a medium-sized refinery going off line," said Speer, a senior petroleum analyst for GasBuddy.com. "When we have price spikes this huge, other refineries will send crude into that region, but it will take several weeks for relief supplies to arrive. We are targeting early September for prices to start coming back down."

The partial shutdown of BP's refinery is just the latest factor driving up Colorado's gas prices. In July, production problems at the WRB Refining plant in Borger, Texas, one of the refineries that supply Colorado, resulted in higher prices in the Centennial State, the Denver Post reported Monday. Once those issues were resolved, prices started to decline.

But relief should be on the way in the next few weeks.

Wavelyn Dreher, communications director for AAA Colorado in Denver, said prices are expected to begin dropping around Labor Day, when gasoline demand begins to decline after the traditional end of the summer driving season and refineries no longer produce more expensive blends of fuel needed in the summer months.

Speer expects prices to eventually drop back below $2 a gallon, despite the shutdown at the Indiana refinery.

"Everything's still looking for $2, but it's hard to tell that to people in Indiana," he said.

Springs drivers should be thankful, however, that they are not in the Midwest; the shutdown pushed average prices in Indiana, Illinois and Michigan up by more than 50 cents in the past week.

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