Drivers in Chicago and other parts of the Midwest may see
gasoline prices at the pump fall to 99 cents a gallon as
regional stockpiles swell.
Average Illinois retail gasoline prices have dropped 34
percent in the past year to $1.57 a gallon, while Oklahoma
motorists can fill up for a $1.36 a gallon, according to
GasBuddy Organization. If gasoline supplies keep growing,
99-cent fuel is not out of the question, said GasBuddy,
which tracks prices at filling stations.
Midwest gasoline inventories hit a 21-year high during
the last week in January, according to government data.
Nationwide inventories may have increased as much as 1
million barrels last week, according to the average forecast
of seven analysts compiled by Bloomberg. Valero Energy
Corp.’s Memphis refinery was said to have recently reduced
how much oil it processes as the profit margin from turning
crude into gasoline declines, according to two people
familiar with operations.
The chance for 99-cent fuel is possible during the next
few weeks before the summer driving season begins, Michael
Green, a spokesman in Washington for AAA, said in a phone
interview. “We may have some stations offering gas below $1
per gallon for marketing purposes, but the chances of a
station offering under $1 are going to decrease pretty
soon.”
Swelling inventories have pushed Chicago wholesale prices down 59
percent this year to a 14-year low of 50.5 cents a gallon, according
to data compiled by Bloomberg. Midwest refiners that took advantage
of cheap crude to churn out more product have seen profits collapse
in recent weeks.
"We’re getting to the point where supplies will peak in the next
couple of weeks," said Phil Flynn, senior market analyst at Price
Futures Group in Chicago, by phone. As inventories rise ahead of
refineries’ spring maintenance season, more refiners may reduce runs
like Valero, he said.
“Instead of getting into a situation where they lose money,
they’re going to cut back production until supplies get back in
line,” said Flynn. “There will be others that follow Valero.”
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