If you were suspicious of the price of gas jumping by nearly 20 cents in the city over the past few days, an oil analyst thinks he has found the reason for the jump.
Roger McKnight with Enpro International tells iNews880 the hike isn’t coming from nowhere, it is a refining problem at two plants in the US, one in Illinois and the other in Indiana.
“Our estimates are that the production could be cut by 50 per cent,” explains McKnight. “At the same time, the Exxon Mobil refinery in Juliette, Illinois rated at 239,000 barrels a day.”
McKnight says the situation will likely last at least 30 days while they do the maintenance and we could see gas climb higher.
“Combine the two, and you have more refining capacity going down in the US than you have in all of Edmonton,” explains McKnight. “So this means that the speculation is the traders have said or are indicating that there is going to be a supply problem or not immediately or in the future.”
McKnight says the US supply of gas and crude is very healthy but with the situation in the Midwest, there could, and probably will be, a tightness in supply.
“US supply of gasoline in inventory is very, very healthy indeed, as is crude, they don’t know what to do with the stuff, but it is the situation in the Midwest that there could, and probably will be, a tightness of supply,” explains McKnight. “No oil company is going to say how much they will cut back because that will affect their market share.”
He says the supply problem could be wrapped up by the time the US Thanksgiving weekend starts.
He adds the increase has nothing to do with the long weekend and there are no pipeline problems reported in Alberta right now and the price hike lies solely on US refinery maintenance. (twd)