Colonial sees Houston, Hebert, Texas area supply disruptions through weekend

Colonial Pipeline has shut down its Line 1 and Line 2 as of Thursday due to supply constraints caused by storm-related closures and the impact to Colonial's facilities west of Lake Charles, Kallanish Energy reports.

A big blow to the US fuel supply - A major pipeline that carries tens of millions of gallons of fuel between Houston and North Jersey has shut down because of Harvey.

Colonial Pipeline Company, an Atlanta-based company with more than 5,500 miles of pipeline supplies more than 100 million gallons of gasoline and other petroleum products every day has announced the suspension of operations for Colonial's Line 2 as of yesterday evening, according to a press statement from Colonial. And second, and most importantly is the pipeline that moves gasoline from the Gulf Coast refineries throughout the South is being shut down because of Hurricane Harvey.

In September 2016, a leak and gas spill in Alabama that closed the Colonial Pipeline led to days of empty gas station pumps and higher prices in Alabama, Georgia, Tennessee and the Carolinas.

Gas prices have risen across the Commonwealth, increasing by about 11 cents per gallon for regular unleaded gasoline since last week.

The news immediately sent US gasoline prices to a two-year high, Reuters reported Wednesday night. The company does not have a projected restart time.

AAA says about 19 percent of the Gulf Coast's refining capacity is offline, representing about 3 million barrels a day of gasoline production. "For the same reasons, we expect that Line 1, which transports gasoline and is now operating at reduced rates, will suspend service tomorrow (Thursday)", according to the press statement.

On Wednesday, Colonial said its two pipelines would be shut down because of the damage done by Hurricane Harvey and the massive flooding that followed in Houston and the surrounding area.

Half of the 26 refineries that connect to Colonial's pipeline system are between storm-ravaged Houston and Lake Charles, which is just east of the Beaumont-Port Arthur metro area.

Map of the Colonial Pipeline. The average price of premium gasoline is now $2.93 a gallon, up almost three cents over the same period.

That's led to a spike in US gasoline futures, which reflect wholesale prices and eventually trickle down to consumers.

"It's gonna be a matter of weeks but gas prices will eventually come back down", said DeHaan.