If you're a motorist in the Great Lakes, its been a rough week at the pump. It started last week in the approach to Memorial Day as retail gasoline prices jumped to $3.85-$3.89/gal in Michigan, Indiana, and Ohio, and yesterday prices jumped to $3.99/gal in Indiana, Ohio, and Kentucky and $3.95/gal in Michigan. Prices also were seen jumping in Minneapolis, St. Louis, and other outlying areas in the Midwest/Great Lakes. This seems limited to this geographic area.
The increases in Indiana started Tuesday, while Michigan and Ohio saw the large jumps yesterday. While Tuesday's hike in Indiana was baffling, a jump in gasoline spot prices and wholesale prices Tuesday night led us to believe that Ohio and Michigan would see a jump Wednesday, and not surprisingly, they did.
The surprise was the prices that gasoline jumped to- $3.99 in Ohio, which typically sees prices spike 5-10c/gal under what prices in Michigan and Indiana rise to. This is because Ohio's gasoline taxes are roughly 10c/gal under Michigan and Indiana.
The big question we're hearing from the media and motorists is "WHY"? Well Tuesday's hike left us a bit stumped as wholesale prices had declined Monday. But Tuesday and Wednesday saw wholesale prices in the Great Lakes jump a combined 9c/gal. The reason for the jump in spot/wholesale prices? We have some guesses, but nothing concrete. What we surmise is that Marathon's Garyville, Louisiana refinery- the third largest in the country- was hit by a tornado over the weekend and suffered damage, pushing part of that plant offline. That may have been a cause for gasoline spot prices to jump Tuesday and Wednesday, setting up the hikes.
Whatever the reason, it has many spooked. Calls and complaints have been coming in at a fast pace- so here's what we expect:
Gasoline prices in Michigan, Indiana, and Ohio will likely drift lower over the weekend. If you need gasoline, hold off for now, but there could be additional hikes next week. Don't panic- there's nothing significant to report at the region's refineries, nor are there significant problems that we're aware of.
We don't expect prices in these areas to breach $4/gal, so many prices should hold under that level for now. We'll keep on this, and we will update you Monday. For now, if you can hold off on filling at the higher prices, I would.