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09/17/2016

Pipeline shutdown in Alabama could send gas prices higher

Motorists in parts of the country could pay a little more for gasoline in coming days because of the shutdown of a leaking pipeline in Alabama.

 

Experts say that any spike in service-station prices will be felt most in the Southeast and should only be temporary.

 

Colonial Pipeline Co. doesn't expect to fully reopen its primary gasoline pipeline, which has spilled more than 250,000 gallons near Birmingham, until next week. The pipeline is used to send gasoline from refineries on the Texas Gulf coast to states in the Southeast and along the East Coast.

 

Prices on futures contracts for wholesale gasoline rose about 2 per cent in afternoon trading Friday to $1.46 a gallon after rising 5 per cent on Thursday.

 

Colonial said that supply disruptions would be felt first in Georgia, Alabama, Tennessee, North Carolina and South Carolina.

 

Tom Kloza, an energy analyst with the Oil Price Information Service, said some stations in the Southeast could run short on supply and boost their prices by 20 or 30 cents a gallon.

 

"The Colonial pipeline is the metaphorical aorta for the supply the most populated regions of the country, and you've lost 10 days of blood flow," Kloza said. The good news, he added, is that the disruption comes at a time when gasoline prices are down sharply from a couple years ago.

 

If prices rise, the effect could be felt the hardest in Tennessee, which is supplied by a spur off the leaky pipeline.

 

Trade groups for service stations and convenience stores in Tennessee assured consumers that the pumps won't run dry. They said fuel wholesalers were hauling gasoline in from fuel terminals and refineries that don't depend on the downed pipeline.

 

"Tankers are just having to drive farther to get the fuel," said Emily LeRoy, executive director of the Tennessee Fuel and Convenience Store Association.

 

Pump-price increases should be smaller in the Mid-Atlantic, Kloza said, because any shortfall from the shutdown of the Colonial pipeline could be made up within about 10 days by tankers arriving from Europe.

 

Jim Ritterbusch, who advises energy investors, said the surge in gasoline futures was exaggerated. A large surplus of gasoline in the central-Atlantic region should have cushioned the blow of the pipeline accident, he said.

 

By the end of September, the bulk of the price spike should be erased as higher prices attract more supply to fill the void, he wrote in a note to clients.

 

Near Birmingham, work crews were trying Friday to repair the pipeline. Georgia-based Colonial Pipeline said most of the spilled gasoline has been corralled in a retention pond, and it downplayed any threat to public safety. It's not clear when the leak started. It was detected Sept. 9.

 

Colonial said it was making up some of the gasoline shortfall by using another pipeline that usually carries diesel and jet fuel. The company said fuel shippers were also sending tankers to supply markets along the East Coast.



    Editor:Albert | Source: The Associated Press


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