Gasoline prices spike as Colonial begins
bypass around damaged line
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[September 19, 2016]
By David Gaffen
(Reuters) - Retail gasoline prices surged
due to continuing problems with Colonial Pipeline Co's gasoline line
that carries fuel to the U.S. East Coast, as the company started to
construct a bypass line around the leak.
Colonial said on Saturday evening that it would construct a bypass that
circumvents the leak, which occurred more than a week ago in Shelby
County, Alabama. It is unclear when construction will be completed but
the company has previously said it anticipates reopening the line, which
can carry up to 1.2 million barrels of gasoline a day, later this week.
The volume of the spill is estimated to be between 6,000 and 8,000
The average price of a gallon of regular gasoline in Georgia rose to
$2.26 as of Sunday morning, according motorists' advocacy group AAA, up
more than six cents overnight and more than 15 cents in a week. Prices
were up 4 cents in North Carolina to $2.136 and 4 cents in South
Carolina to $2.011.
Local media reports have shown gasoline lines forming across the U.S.
Southeast due to the shutdown and analysts believe that retail prices
could be affected for more than two weeks. New York gasoline futures are
up 9 percent in the past week, and rose 0.68 percent to $1.4715 a gallon
after the market opened for trading at 6 p.m. EDT on Sunday (0000 GMT
Colonial shut its main gasoline and distillate lines that run from the
Gulf Coast to the East Coast on Sept. 9 after the leak was discovered.
The damaged Line 1 can carry 1.2 million barrels of gasoline per day and
runs from Houston to Greensboro, North Carolina.
Several states in the Southeast have issued emergency orders waiving
certain rules that restrict transport of fuel by road in order to keep
filling stations stocked with fuel. It is unclear how quickly the
pipeline will be fixed.
"I donít take much solace in Colonial's updates," said Patrick DeHaan, a
petroleum analyst who writes a blog called Gas Buddy.
He said prices are moving up roughly one-tenth of 1 cent every hour and
that it could take several weeks before prices return to normal.
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Out of fuel signs are pictured on gas pumps at a Mapco gas station
at Spence Lane and Lebanon Pike in Nashville, Tennessee, U.S.
September 17, 2016. REUTERS/David Mudd
A Colonial spokeswoman had no immediate response to DeHaan's
However, James Williams of WTRG in London, Arkansas, said the
projected timeline for restart is possible, even with testing
required by federal authorities. He also said consumers' tendencies
to top off their tanks when this type of news hits is not
necessarily cause for alarm, either.
"The shortage appears greater because people are filling up more
often so you are certain there is a shortage because there are lines
at the station but on average they are only purchasing the quarter
of a tank of gas instead of three-quarters," he said.
DeHaan said prices at non-branded chains were rising more quickly
than those with larger, branded operations, because larger regional
gasoline companies have the ability to tap supply more quickly.
Coming into this week, U.S. East Coast inventories of total motor
gasoline, which includes blending components, was higher seasonally
than in the past 10 years, according to the U.S. Energy Department.
(Reporting By David Gaffen and Dan Freed in New York; Editing by
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