SC, NC, GA face gas shortages, price hikes after pipeline leak

Credit: CNN Money
Credit: CNN Money

DALLAS (AP) — 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 percent in afternoon trading Friday to $1.46 a gallon after rising 5 percent on Thursday.

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

Georgia Gov. Nathan Deal has declared a state of emergency.

SC Gov. Nikki Haley has issued an executive order to lift the restrictions on the hours fuel truck drivers can drive per the Federal Motor Carrier Safety regulations.

Governor Haley’s press secretary says “The governor signed an executive order that increases the number of fuel truck deliveries into the state in an effort to minimize any potential impact on our consumers. As engineers work to repair pipeline issues, we will continue to monitor the developments in the region.”

The NC Dept. of Public Safety released the following statement:

Fuel retailers in North Carolina are closely monitoring developments regarding fuel supply levels given the temporary shipment disruption due to the Colonial Pipeline leak in Alabama.

‘Our first priority is maintaining public safety. To that end, we are asking first responders to double check their vehicles to ensure they have adequate fuel supplies on hand to run their operations,” said Public Safety Secretary Frank L. Perry. “We’ve seen fuel disruptions like this before and want to reassure people that there’s no need for alarm at this time.’

Public Safety and Emergency Management officials met today to review fuel contingency plans should the situation escalate. Already fuel suppliers have been working with other providers to resupply fuel via the ports and other means.

Yesterday, Governor Pat McCrory issued an executive order temporarily waiving hours of service restrictions for fuel vehicles traveling in and through the state. The move will help prevent disruptions and backups at major fuel distribution hubs as crews continue working to repair a leak that surfaced last week on the Colonial Pipeline that provides fuel to North Carolina and other eastern states.

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.

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