Chicago jet fuel prices top 5 dollars amid supply crunch
Local prices hit 5 dollars per gallon as refinery maintenance and war-related supply issues impact the region. Airlines are hiking fares to offset the costs.
Chicago has emerged as the costliest market for aviation fuel in the United States, with wholesale prices surpassing $5 per gallon. This significant price surge is the result of a tightening supply chain caused by geopolitical conflict involving Iran and a series of planned refinery shutdowns across the Midwest.
Global energy markets have faced extreme volatility following a blockade of the Strait of Hormuz, a vital corridor for Middle Eastern crude. This disruption has placed upward pressure on global benchmarks, including West Texas Oil, forcing airlines to implement fare hikes and reduce flight frequencies to manage escalating operational costs.
In the Chicago region, which serves the critical O'Hare International Airport, spot prices for jet fuel have spiked from a pre-war average of $2.47 per gallon to over $5.00. While other major hubs have also seen increases, they remain slightly below the Chicago peak. New York Harbor prices reached $4.85 per gallon, while the U.S. Gulf Coast market saw prices rise to $4.86, according to data from GasBuddy.
The regional shortage has been exacerbated by significant maintenance work at local refineries. PHILLIPS 66 took its 356,000-barrel-per-day Wood River refinery offline in late February for a scheduled 45-day maintenance period. Additionally, MARATHON PETROLEUM CORP began maintenance at its 253,000-barrel-per-day Robinson facility in mid-March, with some units expected to remain out of service until mid-May.
GasBuddy analyst Patrick De Haan described the convergence of these factors as a major blow to the regional market.
The Chicago area has been hit by a double-whammy of ongoing refinery maintenance, which has pushed jet fuel prices to over $5 a gallon in the regional wholesale market.
Industry monitors indicate that the Midwest has been disproportionately affected by these outages compared to other parts of the country. Hillary Stevenson, vice president of energy intelligence at IIR Energy, provided context on the scale of the production drop.
Midwest refinery outages averaged 398,000 bpd for the week ending April 3, highest among all U.S. refining regions.
The impact of these refinery snags is not limited to aviation. Market participants report that the supply constraints are also affecting diesel prices, with cash differentials for Chicago spot market diesel jumping 25 cents a gallon recently. These wholesale increases are expected to be passed on to consumers at the pump in the coming weeks.
