Gas reaches $2.99 a gallon in Rockford

By Thomas V. Bona

BusinessRockford.com

Gasoline prices spiked to $2.99 a gallon around Rockford today, but there are signs they won’t go any higher.

Prices have risen about 25 cents in the past week in the Midwest, a bigger jump than the rest of the country. That’s because of several refinery outages that are being resolved.

“Product has been short in the Midwest. ... We think you’ll see the beginning of a decline of prices based on simple supply and demand this weekend,” said Chip Williams, a principal owner of CornerMarket Shell, which operates five local stations. “We understand the economy and the impact it’s having upon all consumers, and the $3-a-gallon level is something we would prefer not to sell at.”

Gas prices fell to less than $3 a gallon in October after last year’s record run and even went below $2 a gallon for a while.

Wholesale gasoline prices out of Chicago, which guide retail prices throughout the region, have been as much as 40 cents a gallon ahead of other parts of the country recently because of the refinery problems, Williams said.

Before today’s increase, the average price of regular unleaded gasoline in the Rockford metro area was $2.83 a gallon, the second-highest in the state and 34th-highest in the country. Chicago was at $2.90, and Illinois was at $2.82.

Those numbers were much higher than the national average of $2.60 a gallon. The only states with higher gas prices than Illinois today were Alaska, California, Hawaii and Michigan. Other Midwestern states — such as Wisconsin, Indiana and Ohio — also saw inflated prices.

A Flint Hill Resources refinery in Minnesota and a Citgo refinery near Chicago came back online recently, and a BP refinery in Indiana is expected back online later this month.

“That’s the way these refinery snags tend to go. When you get one you tend to get three of them,” said Jim Ritterbusch, president of Galena-based oil trading advisory firm Ritterbusch and Associates. But it comes at a particularly bad time of year because demand is increasing with summer travel plans, causing more stress on gas prices.

Although prices might level off in this region, Ritterbusch expects national gas prices to rise an additional 10 or 15 cents a gallon this summer. Although demand hasn’t really picked up, there are signs that the recession could end yet this year, exciting investors who are putting money back into oil.

“They’re feeling frisky, they’re assuming we’re going to see another inflationary upswing,” Ritterbusch said.

Meanwhile, the dollar is weakening, which increases oil prices because that’s the currency in which oil is bought and sold.

Crude oil settled at $68.44 a barrel today after rising more than $2 a barrel in the past week. Oil prices haven’t been this high since last fall.

Ritterbusch warns that although gas prices might stay below $3 a gallon this year, they could hit $4 a gallon by the end of next year if the economy picks up. Increased industrial production and construction, along with more use of planes, trains, trucks and cars, would send prices back up.

“Next year we could be shaping up for another sustained, really strong price rally in gasoline,” Ritterbusch said. “It’s just a real roller-coaster ride.”

Contact staff writer Thomas V. Bona at 815-987-1343 or tbona@rrstar.com.