Gasoline prices throughout the Midwest, also known as Petroleum Administration for Defense District (PADD) 2, have been trending sharply higher since mid-April. Both planned and unplanned refinery maintenance have limited gasoline production, and inventories, which were robust going into turnaround season, have been significantly depleted. While resupply from the U.S. Gulf Coast (PADD 3) is available via pipeline, transit time to the upper Midwest can be as long as three weeks.
According to EIA's weekly survey of retail gasoline and diesel fuel prices, the average regular retail gasoline price for PADD 2 rose from 9 cents below the national average price on April 15 to 19 cents above the national average price on May 20. The price increase in Minnesota was particularly pronounced. The average retail regular gasoline price in Minnesota increased a total of 81 cents between April 15 and May 20, including an increase of 44 cents between May 13 and May 20. At $4.29 per gallon on May 20, the average retail regular price in Minnesota was the highest in the continental United States, 62 cents above the national average. At the same time, price increases have spread westward to North Dakota and other parts of the upper Midwest.
Higher gasoline prices in the Midwest largely reflect supply constraints stemming from decreased refinery runs and lower-than-normal gasoline inventories. Refinery utilization in the Midwest has fallen steadily since the start of 2013, and is now about 83 percent of capacity, below the U.S. average of 87 percent. As of May 17, Midwestern gross refinery inputs were averaging 279,000 barrels per day (bbl/d) lower than at the start of the year (Figure 1). The reduction in runs reflects a combination of routine seasonal turnaround and maintenance activity, unplanned outages, and longer-term upgrading initiatives.
For example, according to trade press, planned maintenance efforts at the ExxonMobil Joliet, Illinois (239,000 bbl/d) and Marathon Catlettsburg, Kentucky (233,000 bbl/d) refineries reduced runs in the Midwest. Unplanned outages, including those at Holly Frontier's El Dorado, Kansas refinery (138,000 bbl/d) and Flint Hills' St. Paul, Minnesota refinery (277,000 bbl/d), further stressed the system. Longer-term projects already underway magnified the impact of the planned and unplanned outages. BP's Whiting, Indiana refinery (337,000 bbl/d), for example, has had 260,000 bbl/d offline since November as coking capacity is installed to increase its ability to run heavy crude. Northern Tier's St. Paul, Minnesota refinery (74,000 bbl/d) was reported to have been shut down in April to undergo a planned expansion.