Chicago gas prices could soar after tornado narrowly misses refinery

New York
CNN
 — 

Gas prices could soon soar across the Chicago metropolitan area after a tornado narrowly missed a major ExxonMobil refinery outside of Chicago Monday night, knocking out power to the facility.

The refinery, know as ExxonMobil’s Joliet Refinery, is located in neighboring Channahon, Illinois. Channahon Fire Chief John Petrakis told CNN Wednesday that the tornado was just on the other side of Interstate 55 from the refinery.

Gasoline futures for the Chicago region jumped about 11 cents a gallon in trading Tuesday, Andy Lipow, president of consulting firm Lipow Oil Associates, told CNN. That came even as other gasoline future prices fell slightly nationwide. The power outage at the refinery “is a significant event,” he said.

“There are three refineries in the Chicagoland area: BP (in Whiting Indiana) with a capacity of 440,000 barrels per day, ExxonMobil Joliet at 275,000 and Citgo in Lemont Illinois at 194,000,” he said. “When one of these refineries shuts, there is little to no cushion of extra supply in the area.”

Wholesale futures for Chicago were up another 4 cents a gallon in Wednesday trading, said Tom Kloza, global head of energy analysis at the OPIS. He said that oil prices have been relatively weak this summer nationally, with even Hurricane Beryl’s hit on the Houston area not being enough to lift prices. But this refinery is major enough to have a impact on local prices.

The line of storms that hit the area Monday night produced 11 tornadoes in the greater Chicago area, including the one that hit Channahon, according to the National Weather Service. It will take a few days to return the Joliet refinery to normal production, assuming no damage occurred beyond the power outage, Lipow said. ExxonMobil has yet to reply to questions about damage or its operational plans.

If damage delays a return of production, gasoline will need to be shipped up from the Gulf Coast via pipeline which will take a couple of weeks to get to the Chicago market, Lipow said.

Lipow said he expects prices will start to rise at Chicago stations almost immediately. The the Chicago area is already at $4.07 a gallon, according to AAA, but that average price, based on Tuesday’s prices, was down 1 cent from the previous day.