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U.S. Gasoline Price Jumps After Colonial Pipeline Explosion Kills One

Colonial pipeline

Gasoline futures were surging almost 10 percent on Tuesday morning after Colonial Pipeline had to shut down part of its main pipeline for a second time in less than two months following an explosion in Alabama that killed one person.

At the time of writing, gasoline futures were soaring to a 9.93 percent gain at US$1.5604, after having touched an earlier high of US$1.6351.

The explosion at the Colonial Pipeline – the main U.S. artery between the Gulf Coast refineries and the eastern states - occurred approximately one mile west of the previous incident, Alabama Governor Robert Bentley tweeted. A three-mile area was evacuated around the Colonial Pipeline explosion in Shelby County, the governor added on Twitter.

Colonial Pipeline said one person died at the scene of the explosion, and five people have been hospitalized with injuries.

This was the second incident, at almost the same spot, along the pipeline that has the capacity to carry 2.5 million barrel per day of refined products such as gasoline, diesel, jet fuel and heating oil.

On September 9, Colonial Pipeline reported a spill in Shelby County, and shut down the line that had leaked. Back then, the restart of the line to the East Coast was postponed past its original stated restart, sparking concerns over the regular supply of the fuel for 50 million people in the eastern U.S.

As a result of the leak, gasoline prices in the U.S. Southeast spiked in September. The temporary shut-down was a problem for the U.S. Southeast because “there are no refineries between Alabama and Pennsylvania that produce substantial quantities of transportation fuels,” the U.S. Energy Information Administration said in September, adding that “the U.S. Southeast is supplied primarily by pipeline flows from refineries along the U.S. Gulf Coast and supplemented by marine shipments from the U.S. Gulf Coast and imports.”

By Tsvetana Paraskova for Oilprice.com

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