By Trish Zornio
Denver gas prices remain above the national average by more than 70 cents per gallon. It’s the largest deviation from national prices in at least five years, according to the online tracker GasBuddy. Average Denver gas prices in March hovered around $4 a gallon for regular unleaded.
According to industry experts, locals can expect to keep feeling the pain at the pumps so long as Suncor’s Commerce City refinery remains closed, and possibly for weeks longer. Compared to larger oil refineries that process hundreds of thousands of barrels per day, the Commerce City facility claims to process approximately 98,000 barrels daily.
But given Suncor also claims that 95% of the end products are sold within the state, the December closure has abruptly disrupted the local distribution of oil and gas products, including jet fuel used at the Denver International Airport. Analysts initially projected gas prices would rise immediately following the shutdown, although it took several weeks before any significant increase was seen at the pumps.
According to Patrick De Haan, the head of analysis of petroleum at GasBuddy, this delay in increased gas prices was likely due to the initial use and depletion of locally stored products.
“The Colorado refinery is not so significant in terms of its size, but it’s critical to Colorado,” De Haan said. “(There was) probably some short-term supply, but once the slack came out of the system, you start to feel the impact.”
De Haan credited Gov. Jared Polis for taking swift action to help stabilize increased costs, explaining that the need to purchase and distribute more oil and gas from out of state required temporary adjustments to transportation regulations. He also noted that demand for petroleum products is typically lower in January than in other months, making the timing of the shutdown ideal from a consumer standpoint.
“Denver in the winter tends to be cheaper than national averages,” De Haan said. “We can say safely if it normally looks 27 cents under national averages, whereas now we swung 73 cents the other way, that’s about a dollar a gallon difference, and much of that dollar gallon difference is because of the Suncor outage.”
De Haan suggests the good news for consumers is that as Suncor’s refinery reopens, local gas prices will likely drop. However, depending on when the facility reopens, that drop might come alongside seasonal price rises, meaning that Denver residents would not see a change in prices, but rather would see an offset of seasonal prices as the national average rises and local averages fall back in line.
Today’s national average gas price per gallon remains slightly lower than 10 years ago. A spokesperson for Suncor confirmed that the company aims to reopen by the end of the first quarter of 2023. Yet experts have noted that past events at similar facilities have sometimes led to unanticipated delays in reopening due to the difficulty of repairs after extreme cold weather events.
In this scenario, Denver residents could expect longer delays in lower gas prices, and possibly even price increases if the shutdown were to linger into the seasonal price rise. Some locals expressed relief at Suncor’s shutdown for environmental and health reasons, but the area actually experienced increased air and water pollution that exceeded Environmental Protection Agency standards due to blowbacks associated with the unexpected closure.
But while some community activists hope the facility will remain closed, Denver residents hoping for a quick reprieve at the pump have reason for optimism. “It’s important to remember that Suncor has every incentive to get this plant back online quickly, that’s how they make money,” De Haan said. “They are losing potential profit the longer they are shut down.”
De Haan acknowledged some economic winners presently, namely out-of-state markets and trucking companies. But he remained adamant that Suncor would want to reopen quickly.
“Suncor is the loser here,” he said. “They want to remedy the situation as quickly as possible.”