GRAND RAPIDS, Mich. — Wholesale gas prices plummeted Monday through Wednesday but could be on the rise Thursday after an electrical fire at the BP refinery in Whiting, Indiana.
FOX 17 talked with Patrick De Haan, the head of petroleum analysis at GasBuddy, Thursday morning to find out what kind of impact the electrical fire could have on gas prices throughout west Michigan.
De Haan previously tweeted Wednesday, before the electrical fire broke out, that there was the potential for gas prices to fall below three dollars per gallon in the greater Grand Rapids area.
It is NOT impossible that some stations in Grand Rapids (aka Sparta) could briefly fall to $2.99/gal if the situation holds!
— Patrick De Haan ⛽️📊 (@GasBuddyGuy) August 24, 2022
“[Wednesday], wholesale gas prices fell some 20-cents a gallon, creating a window of opportunity for stations to get very close to that $2.99 mark, or at least some of the cheaper stations,” De Haan explained.
Thursday, he said that possibility is no longer there.
“Now, with wholesale prices shooting up 30-cents a gallon, it’s completely taken that $2.99 off the table and it could mean that some of the lower priced stations, they may not go up yet, but they also won’t be going down as much as expected because [Thursday’s] increase is offsetting the drop that we saw [Wednesday] that would have paved the way for that potential,” he added.
De Haan told FOX 17 that electrical fires are rare at refineries and Wednesday afternoon’s fire in Indiana looked rather severe.
“Electrical fires are not good,” De Haan explained. “I was just looking at some video, the flaring from that refinery [Wednesday] afternoon, so talk about how quickly things can change in 24 hours that we went from a possibility of very low prices, now to that being off the table and potentially higher prices coming in the days ahead.”
Flaring yesterday afternoon... pic.twitter.com/RVmLYOqyLg
— Patrick De Haan ⛽️📊 (@GasBuddyGuy) August 25, 2022
However, De Haan said there’s no need to panic because of the sharp price drop earlier in the week.
“I think, for now, there’s no reason to immediately believe that prices will jump because of this,” he added. “It’s not necessarily a big price increase event yet and that’s because wholesale prices plummeted rather significantly Monday through Wednesday and now, with this electrical fire, they’re going back up but they’re still below where they started the week.”
Additionally, De Haan said timing could be key.
“Going into the fall, demand for gasoline is going down. If this was in the midst of summer, the situation could be far different. If you remember back to 2015, the BP refinery also went down unexpectedly, and it caused prices to go up by 50-cents-to-a-dollar a gallon. Now it happened a little bit earlier in August,” he explained. “It could be the entire country if it’s severe enough. If this refinery is down for more than a month, which is possible with significant electrical fires, then it could become a much more nationwide issue, but for now, obviously we have no idea of the extent of the damage, so for now, I would say this is probably going to prevent prices in the Great Lakes from falling more than they are [Thursday].”
The main factor, De Haan said, will be the overall damage at the refinery.
“Once we start to learn more about the damage inflicted at the refinery, if it’s down for several weeks, that ultimately could cause prices to start going back up,” he explained. “A lot is going to be in the details of what happened and how long the refinery will be down…There is a potential that, in the next few weeks as we learn what has happened, that prices ultimately could go up maybe closer to four dollars a gallon again. We’ll just have to see. It’s very early, but this type of incident does not sound very good.”
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