Aug. 25--BP on Tuesday said a crude distillation unit at its Whiting, Ind., facility that it unexpectedly shut down more than two weeks ago, causing gasoline prices to skyrocket, is back online.
"Restart of this unit is increasing the refinery's fuel production, with output ramping up over time," BP said in a statement.
The announcement comes less than a day after Illinois Attorney General Lisa Madigan and Chicago Mayor Rahm Emanuel demanded an explanation for the high gas prices in the area.
In a statement, Emanuel said he is pleased with the news and he looks forward to "price equity for Chicago motorists as they fill up their gas tanks." He also called for oil companies to stabilize prices and put processes in place "to ensure that a spike of this magnitude does not happen again."
Annie Thompson, a Madigan spokeswoman, said in a statement that the attorney general's office will continue to monitor gas prices.
Phil Flynn, an analyst at The Price Futures Group in Chicago, said prices at the pump should fall very shortly, though it might take some time for them to reach the low levels seen before the shutdown. "It's going to take a little longer because a lot of retailers lost money when prices spiked," Flynn said.
At a BP station on North LaSalle Street in Chicago, manager Shakeel Khan said gas prices were down 20 cents on Tuesday, to $3.29 a gallon for regular unleaded, and were likely to drop 40 more cents this week.
Khan said busy gas stations like the one he manages sell about 11,000 gallons of gas a day, which means the gas his boss bought for a higher price will sell quickly, allowing him to start selling the lower-priced gasoline and cut retail prices.
BP's refinery, the biggest in the Midwest, shut down the largest of its three crude distillation units for repairs on Aug. 8. As a result, the refinery, which can process 19 million gallons of refined fuel per day, operated at less than half of capacity.
The company continued to fulfill its contracts with gas stations and wholesalers, but it didn't have additional gasoline to sell to the open market, which sent wholesalers without contracts into a bidding war. Those higher costs quickly made their way to retail prices, and gas stations passed along some, but not all, of those higher costs to motorists.
Last week, retail gasoline prices in the Midwest saw the largest weekly increase in the region since the aftermath of Hurricane Katrina in 2005, according to the U.S. Energy Information Administration.
Wholesale prices have since declined, but retail gasoline prices in the Chicago area continue to be about 70 cents more than the national average. In the city, gasoline prices are nearly $1 more than the rest of the nation, according to AAA's Daily Fuel Gauge Report.
Gas prices in Chicago are higher than in the rest of the Midwest in part because the blend sold in the summer is a rare one made at relatively few refineries. The blend calls for the use of corn-based ethanol, which is aimed at reducing smog formation and toxic pollutants in the warm summer air. Also, Illinois is the nation's No. 2 grower of corn, which means changing the blend is a political issue.
City taxes also push Chicago prices higher.
On Monday, Madigan and Emanuel asked the Illinois Petroleum Council to spell out the factors that caused gasoline prices to increase and wanted to know when prices are expected to decline. They also asked what can be done to speed up a decline in prices and prevent future spikes under similar circumstances.
Jim Watson, executive director of the Illinois Petroleum Council, said Monday he was going to research the questions and respond "as soon as I'm able to."
acancino@tribpub.com
