Panic Grips Eastern U.S. With Gasoline Supply Shortage On Horizon

A gasoline pipeline that was shut down for repairs after it leaked last week may threaten the regular supply of the fuel for 50 million people in the eastern U.S. as the deadline for its restart was postponed for next week.

The pipeline, operated by Colonial Pipeline Co., is the main artery between the Gulf Coast refineries and the eastern states, and the largest gasoline pipeline in the country. It carries 1.3 million barrels of the fuel a day.

Line 1, the one that leaked, runs from Texas to North Carolina. The leak occurred about the halfway mark between Houston and Greensboro. Initially, Colonial Pipeline said it will be ready to restart it this weekend, but later it put off the date to next week. The company blamed the delay on bad weather.

Fuel suppliers are finding alternative ways to deliver gasoline to end-consumers, including shipping it by sea and trucks, and loading from storage terminals that are few and far between. Colonial Pipeline itself has re-routed some gasoline to a pipeline usually used for jet fuel and diesel. Whatever they do, however, according to Bloomberg, the amount that can be shipped via these alternative routes and means will not get even close to the 1.3-million barrel capacity of Line 1.

All this has led to three state governors – of North Carolina, Alabama, and Georgia – temporarily amending requirements for the amount of oil products that can be transported by trucks. The Environmental protection Agency also joined the panic and suspended for the time being its requirements on fuel quality.

One fuel distribution company servicing an area spanning from Mississippi to Maryland warned fuel retailers to try to save fuel next week and be quick about placing orders lest the gasoline runs out before it gets to them.

Prices are expected to jump by some US$0.15 a gallon, according to a GasBuddy analyst quoted by Bloomberg. Gasoline futures gained US$0.0687 yesterday on Nymex, and in electronic trade today around 6:30 AM EDT, futures were changing hands at US$1.4297 a gallon.

By Irina Slav for Oilprice.com

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