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June 12, 2013

Analysts: Midwest drivers to see lower gas prices

LANSING, Mich. (AP) — The worst may be over for drivers in the upper Midwest who have been grappling with the highest gasoline prices in the continental U.S.

Analysts said one major Illinois refinery is back online and another big one in Indiana is on track to ramp up production again soon. The refineries' ongoing maintenance — which led to reduced supply and higher prices — are the primary culprits for the surge at the pump.

"On balance, I think the worst is over," Tom Kloza, chief oil analyst at GasBuddy.com, said Tuesday.

Exxon Mobil's refinery in Joliet, Ill., was offline longer than expected, he said. Assuming there are no hiccups with BP's plans to soon restart a crude unit at its refinery in Whiting, Ind., prices could drop below $4 a gallon within weeks throughout a five-state region stretching from Wisconsin to Ohio, according to experts.

"You just have one refinery issue after another. As they're coming back on, that should be a big thing," said Phil Flynn, chief energy analyst at Price Futures Group in Chicago.

AAA said Michigan's average price of a gallon of unleaded regular gas was $4.20 on Tuesday, topped only by Hawaii and well above the national average of $3.63 per gallon. Motorists in Illinois, Indiana and Wisconsin were paying above $4 on average while drivers in Ohio were shelling out $3.90.

Gas prices in the five Midwest states ranked in the top nine states nationally.

With many people preparing to hit the road for their summer vacations, public anger over the high price of gas is building in Michigan. One Republican lawmaker is drafting a bill designed to entice construction of a new refinery in the state and Democrats are questioning the state attorney general's commitment to investigating high prices.

Anton Fellinger, who lives near Detroit in Macomb County's Washington Township, finds the high pump prices particularly acute with his 2008 Chevrolet Silverado.

"My blood boils every time I put gas in it," he said. "I'm biting the bullet right now, but if this continues I might pull the trigger and get something that gets me 30 miles per gallon."

Analysts said it will take some time for the refineries to ramp up production, but the upgrades — which took longer than expected at the Illinois refinery — ultimately could pay dividends because some maintenance is being done so facilities like the one in Whiting can refine Canadian crude oil.

"This is the busiest (refinery) reconfiguring quarter we've seen in a generation," Kloza said. "A year from now you should be beneficiaries of all the cheap crude coming from Canada. It's a little pain this year but perhaps it means gain next year."

 

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