Midwest gas prices jump after refinery issue

Gasoline prices in parts of the U.S. Midwest have surged following an operational upset at ExxonMobil (XOM)’s Joliet refinery in Illinois. In Michigan, the average price for regular gasoline rose 17 cents to $4.61 per gallon, while in Ohio prices increased by 10 cents to an average of $4.08 per gallon. The jump in pump prices adds pressure on drivers in both states as the refinery issue constrains supply of gasoline components in the region.

The price spike was not limited to Michigan and Ohio. Regular gasoline prices rose by about 8 cents per gallon in Indiana, 6 cents in Kentucky and 2.5 cents in Illinois between Wednesday and Thursday. These moves came on top of a further 25-cent-per-gallon increase in wholesale gasoline prices in the broader region later on Thursday, magnifying the potential impact on consumers as higher wholesale costs filter through to retail stations.

The disruption stems from problems with a 50,000-barrel-per-day catalytic reformer at ExxonMobil (XOM)’s Joliet refinery, located southwest of Chicago. A catalytic reformer converts low-octane fuel into higher-octane material used in gasoline, making it a key unit for producing finished motor fuel. The Joliet facility itself has a total refining capacity of 275,000 barrels per day, and the shutdown of the reformer has reduced the availability of gasoline components in the Chicago-area market.

An ExxonMobil spokesperson said the company is working to resolve an operational issue at the refinery but did not provide a timeline for when the unit will return to normal service. The refinery problem has highlighted the sensitivity of regional fuel markets to outages at large facilities, as even a single unit disruption can quickly affect wholesale pricing and, in turn, retail pump prices across multiple states.

Michigan has seen some of the steepest increases among the affected states. Drivers there were paying an average of $4.61 per gallon for regular gasoline on Thursday, compared with a national average of $4.27 per gallon. One contributing factor cited for Michigan’s faster price gains is that wholesale gasoline on the Wolverine Pipeline, which delivers fuel into the state from refineries in the Great Lakes region, is currently priced at the highest levels in the area.

In Ohio, the average regular gasoline price reached $4.08 per gallon after a 10-cent overnight increase. This comes even as state-level gas and diesel excise taxes have been suspended in an effort to contain consumer fuel costs linked to the Iran war. Modest maintenance activity at a refinery in Ohio operated by Cenovus has also been identified as a factor supporting higher regional prices, adding to the impact of the Joliet disruption on supply dynamics.

The combination of the Joliet refinery upset, pipeline pricing dynamics and concurrent maintenance at another regional refinery has tightened gasoline supply conditions across the Great Lakes area. Chicago-area bulk gasoline prices have surged, feeding through into elevated wholesale quotations that underpin retail price increases. The recent jumps in Michigan, Ohio, Indiana, Kentucky and Illinois illustrate how closely linked state-level fuel markets are to large refining hubs and key distribution infrastructure.

While some market participants have expressed expectations that the current spike in Great Lakes gasoline prices may not be sustained, wholesale costs remain significantly higher in the near term. As long as the Joliet refinery’s catalytic reformer remains constrained and regional wholesale prices elevated, consumers in the affected states are likely to continue facing increased gasoline bills at the pump.