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Posted on Mon, May 9, 2011 : 4:55 p.m.

Price of gas in Michigan drops closer to national average, but will it last?

By Kyle Feldscher

Yes, the price of gas has dropped considerably in the Ann Arbor area in the last few days.

But you might want to fill up your tank now, because the good times won’t last long.

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Gas prices set a state record in Michigan last week, as seen at this Ann Arbor fueling station, and they could be back up soon despite a bit of relief in the past few days.

Melanie Maxwell |

Patrick DeHaan, senior petroleum analyst for, said Michigan’s average gas price may be about $4.09 per gallon and falling now but will probably shoot back up to last week’s record levels by later in the week.

He said the wholesale price of gasoline dropped last week, causing the lower prices at the pump right now, but the wholesale price is back up — an increase of 28 cents per gallon — due to oil refineries in the region reporting problems in the past few days.

“It goes to show how quickly the market can change,” DeHaan said. “This morning, the third refinery out of three reported a problem so we’re not catching any breaks.”

According to, the average gas price in Ann Arbor right now is about $4.13 per gallon, about four cents higher than the state average. The current national average for gas prices as of 3 p.m. Monday was about $3.93 per gallon.

Last week saw gas prices in Michigan hit a record high of about $4.26 per gallon, due to reported issues in refineries around the Great Lakes region and the fallout from tornadoes in the southern part of the country.

A Citgo refinery in Illinois reported a flaring event this morning, which is a burning of gasoline and oil, DeHaan said. The incident at the Citgo refinery came one day after a similar event at an Exxon refinery in Illinois, which also had a flaring event last week.

DeHaan said prices might rise as high as the record high prices reached last week, and could reach up to $4.29 per gallon.

There is the possibility that oil companies are manipulating gas prices, DeHaan said. He said all a refinery has to do is release a statement saying there was a flaring event and prices will rise accordingly. He said the rise in flaring events immediately after a drop in wholesale prices was suspicious at best.

“If I was a refinery, it pays to tell the market ‘Hey we have a problem,’” he said. “All they have to do is release a statement and that makes prices go up.”

Kyle Feldscher covers K-12 education for He can be reached at or you can follow him on Twitter.



Tue, May 10, 2011 : 2:14 p.m.

No one here has raised the issue of the role of speculators (purchasers of oil futures contracts who have no intention of taking delivery of the oil). I read one report that oil distributors pay, on average, $.30/gallon to hedge their contracts, a cost that has risen dramatically as speculation in oil futures has risen. I'd love to learn more - any economists out there?


Tue, May 10, 2011 : 11:32 a.m.

Well, that didn't last long. Theose who gamble on oil and other commodities, are betting that the refineries "might" be affected by the high river levels heading toward the Gulf. At least that's the reason du jour. They bet, we pay.

John Q

Tue, May 10, 2011 : 3:30 a.m.

The oil companies have no financial incentive to increase refining capacity. Increasing capacity will only increase supplies, driving down the price of oil. Instead, limit the supply of oil and reap record profits.


Tue, May 10, 2011 : 1:49 a.m.

Look it up; the price drop coincided with a temporary rise in the dollar. Subsidies should bring the price down not up, Rachel. Europe's money has been worth less than the dollar historically so they would pay more per barrel for oil.There is a new bill to remove those subsidies from evil oil being proposed while you read this. What will that do to the price of gas? Let the price rise and the weak dollar continue, it will assure a landslide conservative victory in 2012. People will be so miserable and broke and unemployment will rise again thanks to the policies of this administration. From the supply and demand side we haven't built a new refinery in this country for a long time to keep up with demand and in the summer we have a lot of different formulations to keep the environmentalists happy so that creates a production bottlneck. That decreases supply and causes prices to rise. Not for lack of oil, but lack of refining capacity. A little more complicated than "big oil is greedy and evil".


Tue, May 10, 2011 : 11:54 p.m.

Obviously, that is WHY America subsidies oil, to bring the cost DOWN. American's are to dependent on oil, myself included. However , unless you want vast areas of New York City to go underwater, unless you don't care about millions of environmental refugees flooding into India from Bangladesh, unless you don't mind living in a world where famine is common, I suggest America starts taking serious actions regarding climate change.


Tue, May 10, 2011 : 12:55 a.m.

"will it last?"---No. Get real people, the Government subsidies oil like crazy; no one here pays the ACTUAL cost of gasoline, because American's are not paying for the environmental damage it causes. Other countries in Europe pay around $7 dollars per gallon.


Tue, May 10, 2011 : 11:57 p.m.

oh, and furthermore, more snow (in certain areas) is predicted by climate scientists. And weather is not the same as climate--in fact the Earth has been warming over the last decades--2010 was the hottest year on record.


Tue, May 10, 2011 : 11:35 p.m.

Ooooh yes, I am too young, my favorite argument! Well I'll ask you something Mr. Mike: when was the last time YOU went to a lecture regarding global climate change? When was the last time YOU did an ounce of research and spoke to climate scientists? How about look over peer review articles regarding this issue? How much research have you done on this topic: did you bother to check that &quot;climategate&quot; was a hoax? Do me a favor: look at this list: <a href="" rel='nofollow'></a> put a little research into every one of these scientists. Notice how ALL of these people have received money from oil, and coal companies. The SAME companies that would have the most to lose if America took action on global climate change... In fact some of these people even claimed that tobacco does not cause cancer.


Tue, May 10, 2011 : 1:49 p.m.

&quot;What is the environmental damage?&quot; Does BP in the Gulf of Mexico ring a bell? You think tarballs are no big deal? Tell that to the residents who live in the Gulf states.


Tue, May 10, 2011 : 1:55 a.m.

What is the environmental damage? Carbon dioxide? It comes out of your mouth every time you breathe and plants use it to create oxygen. If we didn't have it we would all die. We are heading into a cooling phase in our weather patterns like in the 1970's. Look up when the last record tornado years were; 1970's, we're getting more snow again and some areas are drying up. You're being sold a bill of goods, taught about how we destroy our own environment in school, too young to know what you're talking about. I went to school when the environment really was being ruined by business and people and saw it first hand. Kind of like what's going on in China.


Mon, May 9, 2011 : 11:40 p.m.

Reporter Kyle: Do you know how many new refinery's where built in your short life in the U.S.? Why Oil companies are reluctant to build new refineries in the U.S.? How much Government &quot;RED TAPE&quot; from the Federal,State and City there is? Instead of doing stories about the Greedy oil companies why don't we see some stories on GREEDY governments? The Governments Tax and Tax and it is never enough?


Tue, May 10, 2011 : 11:49 a.m.

And I love how it is &quot;environmentalists&quot;! That could mean a neighborhood of people that do not want a refinery down the street, or an oyster man that does not want a refinery near his means of support. xmo, would you and your neighbors be willing to allow a refinery in your neighborhood?


Tue, May 10, 2011 : 11:45 a.m.

Propaganda. Many independent refineries were bought up by multi-nationals and closed. Those refineries could be open and producing with little red tape. Are you saying that huge multi-national companies that show BILLIONS in profits are put off by a few permits and fees? Give me a break! In the 80's there were about 300 refineries, now there are about 150-160, with more capacity than the 300. If it is soooo hard to open a new refinery, why close one that is up and running? Oh, right, to manipulate supply and demand. &quot;We had a flare up&quot; profits.