A lingering hangover from a series of refinery outages has Colorado motorists paying higher than national average prices for gasoline.
Colorado’s average price for self-service regular has come down from a record high of $3.34 a gallon in May to $3.13 on Wednesday, but remains 18 cents higher than the national average of $2.95.
The chief reason, energy analysts said, is that gas supplies remain tight in Colorado as two out-of- state refineries continue to operate at diminished capacity following shutdowns for maintenance or repairs.
“This year we have been living hand to mouth in terms of supply, and that has been exacerbated by refinery outages,” said Steve Douglas, a marketing expert for Suncor Energy USA, which operates Colorado’s only refinery, in Commerce City.
The facility supplies about one-third of Colorado’s gasoline. The remainder comes from refineries in Wyoming, Kansas and Texas, several of which have been down for repairs.
Increased prices for Colorado gasoline also stem from higher-than- average profit margins for refiners, although they have come down from record levels in May.
Gasoline production from regional refineries was starting to come back to normal after the maintenance shutdowns until flooding this week closed a major refinery in Coffeyville, Kan.
Although the refinery is not a direct supplier to Colorado, its loss of production for an indefinite period will have a ripple effect on supplies in the West and Midwest, experts said.
“The Coffeyville refinery going down is a major blow to supply as things were just returning to normal,” said petroleum analyst Bryant Gimlin of Fort Lupton-based Gray Oil Co.
“The refinery is likely down for the long-haul,” he said. “Some area refiners were quick to post (price) increases. Those that have it are going to take advantage of those that need it. This part of the country has been running on fumes since February.”
Analysts said demand for fuel this spring and summer has remained strong while supplies have been curtailed. That prevented refiners from building gasoline inventories in the spring for use during peak summer driving periods.
Joseph Leto of Westminster- based Energy Analysts International said gasoline from large suppliers along the Gulf Coast can make its way to Colorado, but with transportation lag times of two to three weeks.
“Supply disruptions in peak- season months can’t be solved quickly,” he said, “resulting in sustained price upsets.”
Most regional refineries that were closed for maintenance or repairs are now open and approaching full production. Among them:
Valero Energy’s McKee refinery in west Texas, closed after a fire in February, is operating at 90 percent of capacity. The facility supplies 17 percent of Colorado’s gasoline.
ConocoPhillips’ refinery in Borger, Texas, closed last month for maintenance, has reopened. Barring problems, full production is expected within a week or two. The refinery supplies 15 percent of Colorado’s gas.
Frontier Oil Corp’s refinery in Cheyenne is operating normally after closing last month for a planned $105 million maintenance project. It supplies about 15 percent of Colorado’s gasoline.
A Sinclair refinery near Rawlins, Wyo., lost about one-third of its production from a mechanical problem last month. It is now back to full production. The unit supplies 6 percent of Colorado’s gas.
Staff writer Steve Raabe can be reached at 303-954-1948 or sraabe@denverpost.com.
