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BP to Ship Fuel to Midwest

In a move that suggests gasoline prices will remain high for a while, BP Plc is shipping about 10 million gallons of European gasoline to fuel-starved Chicago, the Chicago Tribune reported.

"It's very unusual," Joanne Shore, an analyst with the U.S. Energy Information Administration. "Normally, the Midwest region would have no gasoline coming in from Europe, and almost nothing from Canada."

BP's action comes as the Midwest continues to reel from the latest gasoline price spike, which has been partly driven by the shutdown of the Citgo Petroleum Corp.'s refinery in Romeoville, Ill. The facility, known as the Lemont Refinery, produced an estimated 85,000 barrels of gasoline per day, or roughly 2 percent of the demand in the region, Shore said. It was shut down by a fire Aug. 14, and repairs were expected to take about six months.

The impact of the Citgo refinery outage is compounded by the closing earlier this year of the Premcor Inc. refinery in Blue Island and by the need for some refineries to undertake maintenance this fall.

Gas prices have shot up more than 34 cents a gallon in the Chicago area since the fire, and many city service stations now are posting unleaded prices above $2 per gallon. The average gasoline price in the Chicago area now is $1.90 for a gallon of regular unleaded, according to AAA Chicago. Plus, the Energy Information Administration said the Midwest is running at about 7 percent below its five-year inventory average.

Very little of the Midwest's supply comes directly from other countries. Last year, all the gasoline imported into the Midwest from abroad came from Canada, and it amounted to only about 3,000 barrels per day, Shore said. But imports into this region from Europe are unheard of, she said. Most of the Midwest's gasoline supply comes from the Gulf Coast, primarily by pipeline. Some supplies also are sent by barge up the Mississippi River.

Analysts said BP's move is significant: First, it will get badly needed gasoline to the area, and second, it shows that the industry, much maligned for its role in last summer's price spikes, is trying to take steps to address the problem, Shore said.
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