Pipeline Shutdown To Impact NC Gas Prices

Jerome Frank
September 2, 2017

Power outages during Hurricanes Katrina and Rita in 2005 forced the shutdown of parts of the Colonial Pipeline for several days.

Some residents have also reported instances of price gouging at the pumps.

Reuters is reporting that with the shutdown of the Motiva refinery, 19.6 percent or 3.65 million bpd of USA refining capacity will be shut due to Tropical Storm Harvey and some say it is more like 25% with more than four million barrels still off line.

The Colonial Pipeline is the largest system to carry fuel between the Gulf of Mexico and NY. After the USA government waived fuel specifications, allowing refiners to ship winter-grade gasoline two weeks early to ease supply shortages while flooded refineries recover, Valero was ready to ship more fuel.

The disruption of almost a quarter of the nation's refining capacity has already led to a spike in gasoline prices.

Almost one-third of the nation's refining capacity is along the Gulf Coast from Corpus Christi, Texas, to the Lake Charles, Louisiana area, and about one-quarter of the Gulf Coast's oil refining capacity was taken offline, according to the Oil Price Information Service.

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Total SA's 225,500-bpd Port Arthur, Texas, refinery was shut by an early-Wednesday power outage, Gulf Coast market sources said. At a Fort Worth Costco, customers were greeted with pre-hurricane prices, just a fraction over $2.06 per gallon.

As shortages ripple across the East Coast, the most likely suppliers left standing are refiners from Louisiana and Europe, according to Zachary Rogers, a refining and oil products analyst at Wood Mackenzie.

He was reminded of last September when a Colonial pipeline leak in Alabama led to major shortages across the Southeast and left people in a frenzy to get to the pump. Prices ranged from a low of $2.16 at the 2047 Warm Springs Road Marathon to a high of $2.59 at a Summit at 1400 Double Churches Road. "I've never seen a situation this bad", said one East Coast market source, according to Reuters.

Crain is not expecting a supply crunch because distributors at the Doraville terminals, where tankers fill up, are taking a cautious approach.

If residents see their neighborhood stations are all out of gas, they're encouraged to drive a bit farther to find a stations with gas. "So they kind of try to start playing a little defense, and managing their product". The company plans to close the pipeline until workers can adequately evaluate its facilities. Its workers haven't been able to evaluate the damage yet.

Thirteen refineries in Texas are now shut down or in the process.

The pipeline transports more than 3 million barrels of diesel, gasoline and jet fuel each day from the Houston area to the NY harbor and includes more than 5,500 miles of pipeline, most of which is underground.

Other reports by Guamnewswatch

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