Ala. gas pipeline leak could cause price hikes, shortage

A section of the Colonial Pipeline, which runs from Houston to NY, has been closed since September 9 after a spill of roughly 6,000 barrels of gasoline was discovered in rural Shelby County, Ala.

Motorists in the Southeast and East could pay more for gasoline in coming days because of the shutdown of a leaking pipeline in Alabama. It has since restarted parts of the affected line and has begun pumping gasoline on its distillate line.

The major pipeline, one pipe of which has been severed, provides gasoline for an estimated 50 million people on the East Coast each day, according to company estimates.

A leak forced the closure of a pipeline that carries gasoline to the eastern USA, a disruption that threatens to drive up prices and leave service stations without fuel. The cause of the leak has yet to be determined.

The outage has driven gasoline futures higher this week.

Bentley concluded his executive order by reminding all Alabama residents "it is unlawful for any person within the State of Alabama to impose unconscionable prices for the sale of any commodity during the period of a declared State of Emergency".

Retail prices in Georgia and Tennessee were also higher, with regular gasoline rising to $2.136 a gallon on Friday from $2.108 Thursday, AAA said. They said fuel wholesalers were hauling gasoline in from fuel terminals and refineries that don't depend on the downed pipeline.

The agency said the spill is "within an unusually sensitive ecological area" and it ordered Colonial to take action "to protect the public, property and the environment from potential hazards".

The Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA) typically issues a "corrective action order" listing requirements before full restart approval is granted.

USA refined product calendar spreads, particularly the front-month October contract's premium to November, rallied on Friday. Those vessels, because they are required to be USA -flagged under the Jones Act, are typically more expensive than transport via pipeline.

Distillate deliveries are expected to be delayed since gasoline batches are being shipped on Line 1, Colonial said, boosting ULSD spreads.

Docks on the Gulf Coast are "already getting busy" after the outage, a source at a US refiner said.

Related:

Comments


Other news