GAS
Why could Chicago gasoline prices soar after tornado brushes refinery?
A near-miss for a refinery has still damaged the power supply, leaving the station unable to operate.
Chicago gasoline prices are poised to rise after a tornado narrowly missed a major ExxonMobil refinery in the area.
The tornado that struck the Chicago area on Monday night knocked out power to the ExxonMobil Joliet Refinery, located in Channahon, Illinois. This refinery is one of the three major refineries in the Chicagoland area, with a capacity of 275,000 barrels per day. The power outage has disrupted production at the facility, leading to concerns about the availability of gasoline in the region.
“We’re still waiting for power to return. We’re grateful no one at the site was injured,” spokesperson Catie Tuley said in an email.
“Our refinery lost power abruptly during the tornado. As we work to restart operations, power restoration is critical as we assess the equipment,” she added.
What could happen to prices of gas
The Chicago area has a limited supply cushion due to the concentration of refineries. When one of the area’s three refineries shuts down, there is little to no extra supply available to compensate for the loss. This means that any disruption in production can quickly lead to a shortage and subsequent price increases.
As a result, gas futures for the Chicago region jumped about 11 cents a gallon on Tuesday.
If the damage from the tornado is extensive and continues to delay the refinery’s return to full production, gasoline will need to be shipped from other places to make up the shortfall. This process can take several weeks, which could further exacerbate the shortage and drive up prices. Andy Lipow, president of Lipow Oil Associates, expects prices to rise at Chicago stations almost immediately, given the current average price of $3.835 per gallon.