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Fire at Largest Fuel Refinery Threat to This Season’s Harvest

Due to a fire last week at one of the nation’s largest fuel refineries, wholesale fuel prices are about to go up, just as the agriculture industry prepares for the harvest season. 

BP PLC was forced to shut down two crude processing units at its  Whiting, Indiana, refinery after a significant fire Wednesday, according to Wood Mackenzie’s Genscape, a global research and consultancy group. Whiting typically refines approximately 435,000 barrels a day of crude oil, and it is the sixth largest oil refinery by capacity standards in the United States, according to the US Energy Administration. 

The fire happened on August 24th, knocking out the electrical power and the cooling water system used to prevent equipment damage. As a result, the facility will remain shut while it undergoes assessment.

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Shutting down the plant due to this fire can have lasting, adverse effects on most of that region’s distribution centers, as it processes gasoline, diesel, and jet fuel. And right when farmers are preparing for the harvest season. This is also the time of year when the demand for diesel rises as people get ready to start filling their heating tanks, and more extensive machinery used for farming relies on the energy source. Stockpiles of gasoline are currently at their lowest since 2014, and diesel stockpiles have been at their lowest since 2006. 

The Federal Motor Carrier Safety Administration has made an emergency declaration and the need to transport gasoline, diesel immediately, and jet fuel for Illinois, Indiana, Michigan, and Wisconsin, the four states that rely on energy from the Whiting processing plant in Indiana. This declaration will allow these states exemption from specific federal regulations to manage the emergency. It is estimated that the plant provided between 20 to 25 percent of the refined gas, diesel, and jet fuel to these four states.

This weekend, Governor Whitmer of Michigan issued an executive order that will exempt motor carriers and drivers transporting gas and diesel fuel from the maximum weekly driving limits. The order will also accelerate the transition to autumn fuel supplies, taking advantage of the current fuel stocks.

“The impacts of the outage at the Whiting facility will be widespread across our region, and I am taking proactive steps to help Michiganders get the fuel they need to drive their cars and help businesses keep their products moving,” Whitmer said. “With today’s action, I am freeing up more gas supply and removing any impediments to gas delivery to cut down wait times at stations.” 

 CBOB, a common grade of gasoline, increased by 30.5 cents a gallon in the Chicago area on August 25th, just one day after the oil refinery shutdown. Ultra-low sulfur diesel increased by 17 cents on the same day.

BP expects the refinery to reopen “in the coming days,” said BP spokeswoman Christina Audisho. The company “has deployed all available resources and is working around the clock to bring the Whiting refinery back to normal operations as soon as safely possible,” she said.

According to energy analyst Tom Kloza, the shutdown is not expected to cause a surge in gas prices. “Retail prices are not likely to surge but they could recede at a slower rate than what one might expect without a major refinery limping along,” Kloza said.

I am sure that the timing of such a shutdown that will probably affect the farming sector in that region has not gone unnoticed.