Pipeline Explosion Pinches U.S. East Coast Gasoline Supply
A pipeline critical to gasoline supplies in New York City and half a dozen eastern U.S. states exploded and caught fire in Alabama on Monday when workers struck it with a backhoe. One worker died, another half-dozen suffered severe burns, and pump prices for gasoline spiked along much of the eastern seaboard.
The Colonial Pipeline, America’s largest refined petroleum products conduit, normally delivers 2.6 million gallons of gasoline a day to distributors in states from Georgia to New York, and as far west as Tennessee. In the wake of its closure, “gasoline [prices] in New York jumped the most in almost eight years,” Bloomberg reports, “and its premium to crude prices soared 60%. Gasoline traders responded to the possible shortages, rushing to book extra tankers for replacement supplies from Europe, [while] freight costs for cargoes across the Atlantic surged to about US$17 per tonne from about $12.40.”
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The rupture exposed the fossil fuel economy’s vulnerability to supply chain disruptions for the second time in two months. A leak not far from the scene of this week’s blast forced the pipeline to close for 12 days in September, affecting 50 million Americans in the southeast. That outage “triggered fuel shortages across the region, causing motorists in cities such as Nashville, Tennessee, and Raleigh, North Carolina to rush to stations to fill their tanks,” Bloomberg recalls. The “shutdown altered international trade flows for fuel deliveries and led to a federal waiver of gasoline grade rules.”
The southeastern U.S. is “highly dependent on pipeline supplies from Colonial, and, ultimately, Colonial flows form the baseline of U.S. East Coast supply,” said analyst Robert Campbell of New York’s Energy Aspects Ltd.. The longer Colonial’s mainline remains shut, he added, “the more upward pressure will be placed on U.S. East Coast fuel prices.”
Last week it emerged that two members of Canada’s National Energy Board had broken with the panel’s majority to call for the closure of an aging gasoline pipeline that links Ottawa, Montreal, and Toronto.