Gasoline inventories tend to increase in January through March, in anticipation of reduced refinery production during turnaround season (Figure 2). As refinery runs decrease, inventories are used to meet demand. PADD 2 gasoline inventories began April near the top of the five-year range but are now at the bottom of the range, having fallen 6 million barrels since April 12. The combination of lower production from PADD 2 refineries and reduced inventories put upward pressure on prices.
In Minnesota and North Dakota, which have experienced the largest price increases, markets are primarily supplied by the three refineries in those states: Flint Hills St. Paul, Minnesota, Northern Tier St. Paul, Minnesota and Tesoro West Coast Mandan, North Dakota (60,000 bbl/d). Additional supplies arrive via pipeline from refineries in other parts of the Midwest and the Gulf Coast, and to a lesser extent from refineries located in Montana. However, given the distance these additional barrels must travel, resupply can take weeks.
Trade press reports over the past several days indicate that supply constraints may be easing. Northern Tier is said to have recently resumed normal operations and the ExxonMobil Joliet refinery near Chicago is expected to restart soon. In addition, it has been reported that supplies shipped on the Explorer Pipeline from the Gulf Coast have begun to reach the market. Lastly, BP's Whiting refinery could begin operating its upgraded crude distillation unit by the end of May or early June.