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BP behind biggest gas spike since Hurricane Katrina

Gas prices flirting with $3 per gallon regionally because of Aug. 8 issue at Whiting refinery.

By Daniel J. Graeber
BP behind biggest gas spike since Hurricane Katrina
Outage at part of BP's refinery in Whiting, Ind., leaves Great Lakes states spared from national trend of falling gasoline prices. Photo courtesy of BP.

WASHINGTON, Aug. 20 (UPI) -- The outage at BP's Whiting refinery caused regional gasoline prices to increase at their fastest pace since Hurricane Katrina, the U.S. government said.

BP reported an unplanned outage Aug. 8, shutting down one of the three crude oil distillation units at the Whiting refinery, the sixth largest in the country and a main gasoline supplier to Great Lakes states. The U.S. Energy Information Administration said it was likely a result of leaky pipes at the facility, cutting the refinery's gasoline production by at least 120,000 barrels per day.

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EIA said wholesale gasoline prices increased dramatically as a result of the refinery outage, which spilled quickly over to consumer prices.

"On Aug. 17, regular retail gasoline prices in the Midwest increased 32 cents per gallon from the previous week to $2.79 per gallon, the largest weekly increase for Midwest gasoline prices since the aftermath of Hurricane Katrina in 2005," EIA said in a statement.

The largest one-month increase on record was Aug. 5 to Sept. 4, 2005, when prices jumped 75 cents largely because of Hurricane Katrina.

Facing pressure from state lawmakers, Michigan Attorney General Bill Schuette last week issued a letter to BP asking for more transparency on the issue. In response to email questions, BP spokesman Brett Clanton pointed only to previous statements noting the company was acquiring additional supplies of fuel and meeting its contractual obligations.

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Schuette warned regional retail gasoline stations against hiking prices unnecessarily. Motor club AAA said gas prices by the end of September should drop dramatically because, by then, people will be driving less and refiners will have switched to a winter blend of gasoline, which is cheaper to produce.

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