Michigan gas prices surge and are expected to go up more this week

• The Phillips 66’s Wood River refinery and Marathon Petroleum's Robinson refinery have been offline.
• One analyst predicted gas prices could go up 65 cents an gallon.
• A group warned crude oil prices could reach $150 a barrel.

Michigan gas prices, which already had surged from a week ago, jumped again — in a single day — an average of 15 cents a gallon to a statewide average of $4.19 a gallon.

The new average in Michigan on Tuesday, April 28, followed several bits of news, including predictions from analysts that prices would increase this week, a DC think tank declaring "another oil crisis is here" and dashed hopes for a timely resolution to the Mideast conflict.

The increase, calculated by AAA, also came just a day after Michigan was identified as the state with the biggest weekly surge, and one analyst predicts prices could rise by up to 65 cents more in the next three days.

The new forecast puts prices at about $4.85 a gallon — and in some places closer to $5 a gallon, which could add to Michiganders' woes in both metro and rural areas, and put a damper on plans for Up North, summer getaways, which northern Michigan depends on.

In addition to high oil prices, Great Lakes states — including Michigan, Illinois and Wisconsin — also are facing a rise in wholesale gas prices as a result of what petroleum analysts Patrick De Haan has referred to as regional refinery snags.

The Phillips 66’s Wood River refinery and Marathon Petroleum's Robinson refinery, both in Illinois, have been offline or partly out of commission, which has affected the supply and pricing, with sharp increases in spot trading.

De Haan and other experts are now warning that gas prices will likely remain high, and perhaps even continue to rise, despite earlier claims from President Donald Trump and others in his administration that the prices were a short-lived spike. De Haan's prediction: as much as a 65-cent-a-gallon surge this week.

Higher prices could put Michigan, which depends on the auto industry, at risk.

It's uncertain when prices might come down. Earlier this month, Trump's own Energy Secretary Chris Wright said in an interview on CNN that gas might not go below $3 a gallon again "until next year." And Tuesday, Dan Pickering, chief investment officer at Pickering Energy Partners predicted to Politico that "a day of reckoning" is coming.

Oil is now trading at about $100 a barrel, and could go to $150 a barrel or higher.

Just a week ago, however, Michigan’s average had dropped to $3.80 a gallon, according to AAA. The dip came, in part, because crude oil prices had fallen and on optimism that the Strait of Hormuz, the waterway through which about a fifth of the world’s oil passes, could be reopened.

But by Saturday, April 25, Trump had canceled plans for more talks in Pakistan to negotiate a resolution, and Iran and the United States are continuing to block ships from moving through the waterway.

On Monday, the president told his advisers, according to various reports, that he was unhappy with Iran’s proposal to set aside discussion of Iran’s nuclear program until the war was over and shipping disputes had been resolved.

In a twist, however, it was Trump — in 2018 — that scrapped an agreement that curtailed Iran’s nuclear program by withdrawing from it. What’s more, Iran’s Foreign Affairs Minister Abbas Araqchi went to Russia to meet with President Vladimir Putin, who praised Iran for not bowing to the United States and Israel.

"We see how ​courageously and heroically the Iranian people are fighting for their independence and sovereignty," Reuters reported Putin told Araqchi, ​saying he hoped Iran could get through what he called a "difficult period" and that peace would prevail.

In addition to gas, the higher oil prices are also affecting diesel and jet fuel.

Earlier this month, jet fuel in Chicago became the most expensive in the United States, with prices topping $5 per gallon, Reuters reported. The increased price of jet fuel is not only raising the cost of air travel and delivery costs but also putting discount airlines, which rely on thin profit margins, at severe financial risk.

The concerns are so serious that the trade group, Association of Value Airlines — which includes Spirit, Frontier and Sun Country — has asked the Trump administration for $2.5 billion to offset fuel costs, news outlets report.

Moreover, Spirit, which flies out of Detroit Metro, is seeking a government bailout.

The longer prices remain high, the more that will affect the price of goods and inflation.

Pickering, a financial services executive, suggested that the stock market has largely ignored the global energy crisis so far, but that won't last. And in a New York Times essay, Kyla Scanlon, the author of "In This Economy? How Money & Markets Really Work," warned that while markets have shrugged at economic red flags — including the energy crisis and war — the "rescue infrastructure" to fix a collapse is depleted.

At the same time, a report, "Another oil crisis is here. How will American drivers respond?" released Monday by the nonprofit Brookings Institute in Washington, DC, is cautioning crude oil prices could reach $150 a barrel, and the increases are hurting families.

"The result," the report said, "is a real strain on household budgets, and the impacts will be more pronounced for residents of more sprawling metro areas and rural places, lower-earning households that must continue to drive, and people who fit in both categories."

Contact Frank Witsil: 313-222-5022 or [email protected]

The story was updated to correct the date, 2018, when the United States withdrew from the Joint Comprehensive Plan of Action. It was signed in 2015.