Gasoline’s prices in US Midwest Surge

By Monday, the price of a gallon of regular unleaded rose 0.13 from last week in Detroit to settle at 3.99.

The spike in retail gasoline prices follows a series of pipeline spills in Wisconsin and refinery shutdowns in Chicago and California.

The impact of the string of industrial incidents on consumers in the region may be short-lived, but retail prices rarely decline as fast as they increase.

The American Automobile Association, in its daily gasoline report, states a gallon of regular unleaded gasoline in Detroit cost 4.05, up from the 3.69 average just one week ago.

Chicago drivers, meanwhile, were paying on average 4.39 per gallon, a 10% increase from last week.

According to AAA, the national average for a gallon of regular unleaded is 3.62. While that's a far cry from the national spikes early this year, the regional blow has irked many area residents wary of high consumer prices and pipeline incidents.

An industry analyst said much of the region was hit by "a cluster of bad luck." Last month, pipeline company Enbridge reported a leak on a pipeline in Wisconsin. A section of the Lakehead oil pipeline system ruptured there, cutting off oil supplies to Chicago-area refineries. US Transportation Secretary Ray Lahood said the incident was "absolutely unacceptable" and forced Enbridge to keep the line closed until authorities review a restart plan for the entire 467-mi pipeline.

In Michigan, the state's governor last month issued a fuel emergency in response to the rupture of pipeline that released 1,000 bbls of unleaded gasoline in eastern Wisconsin. Gov. Rick Snyder's emergency declaration lifted the restrictions placed on long-haul truckers so they could deliver retail petroleum products. Less than two weeks later, Enbridge confirmed that 1,200 bbls of Crude Oil spilled from Line 14 in central Wisconsin. A nearby resident said the pipeline "blew like an oil well."

Enbridge maintains that "better than 99.999%" of the time, there are no problems with its vast network of oil pipelines in the United States. When accidents do happen, however, they are costly. Last year's Crude Oil spill in Michigan, on the same network as the Wisconsin leak, was the costliest onshore incident in U.S. history and EPA authorities are still reporting sheen in some of the waterways soiled by the release. Refineries, meanwhile, have shut down at a time when the region is using "Summertime Gasoline," a blend not manufactured very much outside of the Midwest.

Patrick DeHaan, a petroleum analyst at reporting Web site gasbuddy.com, told a Chicago newspaper that the regional spike in gasoline prices is temporary and likely "the last hiccup" for the Summer. Nevertheless, gasoline prices rarely experience a 10% decline overnight.

"As we all know, (retail prices) only move down by pennies per day," he said.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.