Gas prices rise with no end in sight

Refinery failures, broken pipelines contribute to price hike
Gas prices rise with no end in sight

Prices at the pump continue to climb, and in Madison, the cost of a gallon of gas has spiked 35 cents over just a few days. A dangerous combination of factors, including refinery failures and broken pipelines, are contributing to the significant hike.

Erin Roth with the Wisconsin/Minnesota Petroleum Council calls the situation a “perfect storm” for such an increase in gas prices at a time when gas is already in short supply.

“Our inventory are in people’s gas tanks,” Roth explained. “That’s how slim the inventory margins are on gasoline and diesel fuel.”

According to Roth, Chicago refineries are facing issues that are limiting production. The cost of corn is driving up the cost of ethanol, and crude oil prices are on the rise as well. Summer driving also fuels demand.

On top of all of that, two Wisconsin pipelines recently broke, cutting off supplies coming through the state. The pipeline run and managed by Enbridge is still shut down after a break in Adams County. The federal government is now requiring the company to go through an inspection of the entire system and get a third-party opinion on all plans before it is reopened.

A representative with Enbridge says there is no estimate on when that process will be completed.

“That’s over 13 million gallons of crude oil that flows to those Chicago refineries,” Roth said.

Roth says mom-and-pop pumps have it worse in this kind of environment. One smaller station on Monona Drive charged $4.15 per gallon Friday. Without a franchise-based contract and a guaranteed minimum gas supply, those types of businesses are buying up leftover gas at top dollar.

“When gasoline gets tight like we are in the market right now, they have a difficult time purchasing gasoline, and if they do it’s very expensive,” Roth said.

Roth says consumers too often put the blame on oil companies and need to see the bigger picture when gas prices spike.

“They really don’t understand the difficulty it takes from wells to wheels to get product, out of the ground, ship it, refine it, make a profit off of it, and sell it at retail at a reasonable price,” Roth said. “So when we have a hiccup in the system, it creates problems in the marketplace.”

With the timeline on the Enbridge pipeline repairs up in the air, Roth can’t even estimate when the prices will stop increasing or how high they might go.

“We’re in a period of escalating prices in an uncertain market, and anything could go at this point,” Roth said. “I don’t have a crystal ball, but we’ve seen prices escalate again today. So we’ll just have to see what tomorrow brings.”