Analyst: Expect short-term gas price spike in Iowa, across Midwest

Gas prices in Iowa and other Midwestern states could spike as much as 30 cents in the next week due to a larger than typical slate of maintenance work at refineries around the Midwest, tightening supplies, according to a fuel analyst.

Patrick DeHaan, senior petroleum analyst at GasBuddy.com, said temporary fluctuations in gas prices is normal as summer fuel is replaced by gas refined for winter, but the projected 10 to 30 cent increase this year is unusual, although likely short-lived.

'This is not the usual reaction we see to the cheaper winter gas,” DeHaan said. 'A lot of refineries in the region are down for one reason or another. This is a normal time to eke out repairs, but there have been a whole slew of issues.”

A dozen Midwestern refineries were operating at 87 percent capacity last week, on average, down from 98 percent in early September, DeHaan said. It has put a crimp on the supply, triggering the increase, he said.

DeHaan identified a laundry list of projects at more than a dozen refineries, such as work at a plant in Wood River, Ill. deferred from earlier in the year; a fire limiting capacity to 70 percent at a Husky plant in Lima, Ohio; and continued repairs from an August outage at a BP refinery in Whiting, Ind.

Gas prices have risen about 20 cents in the past week in Cedar Rapids, from about $2.24 per gallon, for the least expensive grade, to about $2.43 on Wednesday, according to AAA Daily Fuel Gauge Report.

Prices are still down about 60 to 70 cents per gallon compared to this time last year.

The increase should occur over the next week and will stay high for a few weeks before dipping to pre-maintenance levels by Thanksgiving, DeHaan said.

Price increases in the Plains states could be slightly more pronounced, perhaps a nickel more, than the Great Lakes region due to the nature of work and location of refineries, he said.

Gail Weinholzer, director of public Affairs AAA Minnesota/Iowa, was a bit more optimistic about the price change.

Weinholzer said refiners are running down their summer oil supply before switching to the cheaper winter blend and undertaking maintenance during the season switch, which is all normal this time of year.

She said she doesn't expect any bigger than normal price jump, most likely around 10 cents per gallon.

'It is really a short-term situation, and shouldn't last more than a week or two,” she said. 'When we get past Halloween and start using the cheaper winter gas, we will see gas prices begin to fall.”

Both Weinholzer and DeHaan predict gas prices could drop to the $2 range by Christmastime.