Key Points
Michigan gas prices have surged over the past week.
A major regional refinery is offline, pushing already elevated prices even higher.
It's unclear when the refinery will come back online and provide relief to Michigan drivers.
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Michigan is home to the "Motor City" of Detroit, and its drivers have grown accustomed to relatively low gas prices. Usually, Michiganders pay slightly below the national average to fill their tanks.
Not anymore, unfortunately.
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This week, Michigan's gas prices skyrocketed. Drivers are now paying an average of $4.86/gallon for regular unleaded gasoline, a full $0.40/gallon above the national average. That puts Michigan on a top-10 list it doesn't want to be on -- the top 10 most expensive states for filling your tank (it's currently in ninth place).
How did a state that's usually at or below the national average for gas prices suddenly become one of the worst states for cost-conscious drivers? Most people might just blame the war in Iran, but the truth is very different. Here's what's going on.
Image source: Getty Images.
Not average anymore
U.S. gas prices have been rising steadily since the Iran war began about two months ago. A year ago today, the national average price for a gallon of regular unleaded gasoline was $3.17/gallon. A month ago, that had skyrocketed to $4.11/gallon. Today, it's an even more painful $4.46/gallon.
Although those price increases had affected Michigan drivers, the state's gas prices were rising more slowly than the national average. A year ago, the average regular unleaded gas price in the state was $0.03/gallon higher than the national average, at $3.20/gallon. But a month ago, the statewide average was $3.87/gallon -- a full $0.24/gallon below the national average.
Sadly, that trend has completely reversed itself this week. Michigan gas is now $0.40/gallon more expensive than the national average, at $4.86/gallon. But why?
It may sound unbelievable, but a power outage is actually to blame. Here's how.
Midwestern refinery troubles
The outage occurred at BP's (NYSE: BP) massive Whiting Refinery in Whiting, Indiana, the largest gasoline refinery in the U.S. outside of Texas and Louisiana. It's BP's largest refinery in the world, cranking out 16 million gallons of gasoline, diesel, and jet fuel per day, and the largest supplier of gasoline to Michigan.
Image source: Getty Images.
That refinery shut down due to an electrical problem on April 26, and it sent gasoline wholesale prices soaring throughout the Great Lakes region. It took about a week for those higher wholesale prices to fully trickle down to retail gas stations in Michigan, but now the prices at the pump appear to be fully reflecting the effect of the missing supply.
How to proceed
If you're a BP shareholder, you likely won't notice much of an effect on your investment.
The company's products segment might take a small hit to revenue and earnings from the outage, but it's likely to be minimal. The last Whiting outage, for example, in October 2025, only contributed to a $100 million reduction in BP's fourth-quarter products segment earnings before interest and taxes (EBIT). BP's companywide 2025 EBIT was $12.9 billion, so $100 million is just 0.08% of the annual total. BP's stock has actually risen about 0.5% since the outage occurred, so Wall Street clearly isn't concerned.
Michigan drivers, on the other hand, are stuck in limbo. We don't know exactly when the Whiting Refinery will come back online, and Michigan gas prices are likely to remain elevated until it does. For now, you may want to hold off on filling up your tank as long as you can, and hope the facility comes back online soon to bring prices lower.
This situation is a tough reminder that gas prices are tied to both global and regional supply and demand, and that no matter how high gas prices are, they can always go higher. Of course, we tend to notice price spikes a lot more when prices are already high, possibly because we're more attuned to the price of gas when it has an outsize effect on our wallets.
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John Bromels has positions in BP. The Motley Fool recommends BP. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
