Colonial Pipeline shutdown causes NC pump panic

The two pipelines transport around 675,000 barrels per day (bpd) of West Texas crude oil into East Houston. But supplies from distant markets may not arrive soon enough to avert a crunch after the Colonial Pipeline, the biggest USA fuel system, said it would shut part of its main lines to the Northeast.

Travelers were already feeling the effects of Hurricane Harvey at the gas pump this week, just days before a busy holiday weekend. The Colonial Pipeline runs from the Houston area to the NY harbor and includes more than 5,500 miles of pipeline, most of it underground.

The pipeline has been limited due to the effects of Harvey.

The storm, which lashed Louisiana with rain yesterday, has pummelled the US Gulf Coast, burying Houston and the surrounding area under several feet of rain and forcing the closure of almost a quarter of US refining capacity.

In anticipation of shortages, Gov. Roy Cooper issued executive orders Thursday that will help keep the state stocked with gas. Crews will have to inspect the portions of the pipelines in Houston that are underwater to resume operations.

"This is going to be the worst thing the USA has seen in decades from an energy standpoint", said an East Coast market source, who declined to be named as he was not authorized to speak to the press.

The Colonial Pipeline is the largest system to carry fuel between the Gulf of Mexico and NY.

"As Harvey continues to wreak havoc, consumers will see a short-term spike in the coming weeks with gas prices likely topping $2.50 per gallon, but quickly dropping by mid to late September", said John B. Townsend II, AAA Mid-Atlantic's Manager of Public and Government Affairs.

Gas prices have skyrocketed since Hurricane Harvey slammed into the Texas coast and shutdown refining and pipeline operations.

The average USA price for regular gasoline at the pump rose 7 cents Thursday to $2.519 a gallon, the steepest single-day increase since April 5, 2007, according to data from AAA, the largest US motoring group.

Colonial continues to ship as much gasoline and other refined products as available from Louisiana-based refineries and other refineries on the Colonial system east of Lake Charles, and will continue to do so as markets return to normal.

Washington, D.C. gas average at $2.65 today, up three cents from yesterday and up eight cents in the last week.

Gas prices are up across the nation as the Gulf Coast recovers from the destruction left behind by Hurricane Harvey, which has killed at least 31 people since making landfall last Friday.

Before Colonial's announcement, gas prices had gone up 7 cents overnight on Wednesday raising the Triad's average to $2.32. Among the reasons: About one-quarter of the Gulf Coast's oil refining capacity was taken offline, according to the Oil Price Information Service. The premium for Chicago-area gasoline above benchmark futures is at its highest since June 2016, while the Gulf Coast price is at its widest above futures since August 2012. Motiva said restarting the refinery would depend on floodwaters receding.

The Department of Energy has released 500,000 barrels of oil from the nation's reserve of crude oil.


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