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Refinery fire to boost Midwest pump prices April 30, 2001


NEW YORK (Reuters) via NewsEdge Corporation -

Hot Midwestern gasoline prices are expected to jump further at the pumps in coming weeks after a large Illinois refinery was damaged by fire over the weekend, industry experts said Monday.

Tosco Corp. said Monday it was forced to shut down half of its refining production at its Wood River plant in southern Illinois after a blaze struck one of its main units on Saturday -- an event expected to tighten the region's already strained supply.

The refinery, which supplies both the St. Louis and Chicago areas, is not expected to return to its normal 295,000 barrels per day of gasoline and diesel production for two weeks, a company official said.

``This is just the kind of thing that we were hoping wouldn't happen,'' said Ronald Leone, executive vice president of the Missouri Petroleum Marketers and Convenience Store Association. ``Supply has been so tight that any sort of disruption is going to cause massive price spikes.''

Gasoline prices in the Midwest are already surging at a quicker pace than in the rest of the country, with pump prices breaking over $2 a gallon in some major cities, according to the American Automobile Association.

The spike is the result of the region's razor-thin supplies, which are more difficult to build up because of a lack of refining capacity in the region and tight pipeline space from Texas and other heavy-producing states.

Inventories in the region are 2.3 million barrels, or 1 percent, below last year's crisis levels, largely because of the permanent shutdown of Premcor Inc.'s Blue Island, Ill., refinery over the winter.

``This new refinery problem will definitely make things worse,'' said Norma Cooper, spokeswoman for AAA's Illinois division, referring to Tosco's trouble. ``Nobody wants to pay higher gasoline prices, but they're already over $2 a gallon in some places.''

As a signal of tougher times looming at the pumps, wholesale gasoline prices spiked sharply Monday after news of the Tosco fire spread.

In Chicago, regular wholesale gasoline surged nearly 12 cents to $1.35 a gallon, while prices in the Missouri area gained nearly 11 cents to $1.29 a gallon, dealers said.

Spikes in wholesale gasoline prices generally take around two weeks to be reflected at retail stations.

U.S. retail gasoline prices have surged 20 cents above their year-ago levels to average $1.63 a gallon, according to the AAA.


-- Martin Thompson (, May 01, 2001

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