July 24, 2014 SIGN IN | REGISTER

Regional Gas Price Spikes Pose New Challenges for Industry, Lawmakers

Memorial Day weekend marks the unofficial start to the summer driving season — and in recent years that has meant steadily rising gas prices. But for the second consecutive year, drivers filling their tanks for holiday road trips paid less at the pump on average than a year earlier.

And AAA motor club, which pegged the average retail price for a gallon of gasoline nationally at $3.63 on May 27, projects that prices will continue to drop this summer.

Despite this bright picture nationally,not everybody has been enjoying cheap gasoline. Across much of the upper Midwest and the Pacific Coast, price spiked to more than $4 a gallon just before Memorial Day. Ironically, some of the hardest-hit areas — such as North Dakota, Minnesota and Nebraska — are near the sources of booming North American oil production, such as the Bakken shale formations and the Western Canadian tar sands.

The regional price spikes pose new challenges for industry and policymakers. In past summers, the primary driver of higher gas prices has been supply shortages and the high cost of crude oil on world markets. But crude oil prices are down from a year earlier, and the Energy Information Administration projects they will fall further in the year ahead.

Private sector and government analysts say the regional spikes in gasoline prices can be blamed on a high number of planned and unplanned refinery outages, which affect areas served by the facilities. Earlier this year, malfunctions or breakdowns caused unplanned refinery shutdowns on top of scheduled closures for routine maintenance, all of which led to regional gasoline shortages and price increases.

The situation prompted Senate Energy and Natural Resources Chairman Ron Wyden, D-Ore., and committee member Al Franken, D-Minn., to ask Energy Secretary Ernest J. Moniz to restart a data collection program authorized by Congress to track planned refinery outages.

A 2007 energy law (PL 110-140) required the department’s statistical arm — the Energy Information Administration — to review and analyze information on scheduled outages at least twice a year.

The intent of the reporting requirement was to preclude simultaneous shutdowns of multiple refineries in the same region, Wyden and Franken wrote. But the EIA stopped issuing the reports in 2011, citing funding cuts.

Under the law, the Energy secretary can encourage refiners to limit the capacity taken out of service at any one time should the EIA’s studies show that the outages could affect gas prices regionally or nationally. The department lacks authority, however, to forbid refiners from conducting scheduled maintenance or to compel facilities to keep operating.

The EIA reports didn’t persuade refiners to harmonize their outages. In fact, they don’t coordinate their schedules for legal and business reasons — many treat that information as proprietary, according to American Fuel and Petrochemical Manufacturers, a trade association for refiners. The group said it is unaware of any situations where the Energy Department suggested that a refinery change its outage schedule.

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