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Gas prices soar after major refinery breaks down in Indiana

Motorists in the Detroit Lakes area have been shocked by big gasoline price jumps the past few days, with the cost of a gallon of regular gas jumping 30 cents or more.

“I’m hoping it will go down, because it makes it easier to visit my parents here,” said David Grouws, of Decorah, Iowa.

He was gassing up at the Petro Plus station on Highway 10 East Friday morning. His parents, Doug and Carol Grouws, live on Long Lake near Vergas.

The immediate cause of the price spike was market reaction to the unexpected partial shutdown of the largest refinery in the Midwest, BP’s Whiting, Indiana plant.

The plant is having problems with its largest crude distillation unit, which handles more than half of the facility’s capacity, according to Will Speer, senior petroleum analyst with GasBuddy.com.

“The Indiana refinery issues are having a ripple effect in your area,” he said. “When over half the refining capacity went down, it sent shock waves through the United States.”

The refinery is the seventh largest in the U.S. and the biggest in the Midwest, according to the U.S. Energy Information Administration.

A recent modernization project there significantly increased the share of heavy, sour crude oil that it can process, from about one-fifth of the crude oil 

feedstock to about four-fifths.

Its normal operating capacity is 413,500 barrels per day.

The cost of a gallon of regular gas in Detroit Lakes was up to $2.69 a gallon on Friday morning, and the price is expected to keep rising, perhaps to the $3 mark or more, Speer said. Some analysts are predicting price spikes of $1 or more a gallon.

Higher gas prices really hurt, said Kaysee Gerving of Frazee, who has been traveling to Grand Forks to get ready for the school year. She is majoring in nursing, and plans to become a registered nurse.

“I’m moving stuff there now,” she said.

Others were more fatalistic about the higher prices.

“We’re retired, and I’m going to see what I what I can see before I die,” said Steve Ellingson of Brooklyn Center.

“It doesn’t matter what the price is, we have to go home,” added his wife, Linda. “We’ll just have to spend more money. We can’t make our own gasoline.”

The two were gassing up at the Clark station in Detroit Lakes before heading home. They had 

vacationed at Breezy Shores.

The Indiana refinery problems are expected to take one to two months to work out, Speer said.

But that is just part of what is turning into a perfect storm of bad news for gas prices this summer.

“Yesterday it came out that an Illinois refinery that Marathon owns between St. Louis and Indianapolis will continue with planned maintenance,” he said.

The plant’s capacity is 225,000 barrels of gasoline a day, and the maintenance shutdown of two units will drop output by about 68,000 barrels a day, Speer calculated.

Gasoline demand is the highest since August 2007, and at the same time, even before the refinery problems, gas inventories were the lowest of the year for the Midwest region, according to a statistical release by the US Energy Information Administration.

For some, the higher price of regular gas wasn’t a problem.

Dwight Gottsman of Detroit Lakes was putting diesel into his Ram 2500 pickup at Holiday station.

“Diesel finally came down to where it’s comparable to gasoline,” he said. “It hasn’t been that way for a long time.”

The higher gas prices, he added, “only affect my toys.”

Greg Nelson of Perham said gas prices don’t seem that bad, since he is used to spending over $3 a gallon for premium to fuel his jacked-up ’97 supercharged Toyota T11 pickup.

“I had it for 15 years,” he said at Holiday, while filling up the 2009 Toyota Tacoma pickup that he now drives. “My wife made me get rid of it, otherwise I’d still be driving it now.”

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