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Southern gasolene pipeline to shut down due to Harvey

Published:Thursday | August 31, 2017 | 12:00 AM

Colonial Pipeline is shutting down a key line that supplies gasolene to the South due to refinery shutdowns and other impacts from Tropical Storm Harvey, meaning prices at the pump could rise even more in many states.

The Georgia-based company expects to shut off the line Thursday, the company said in a statement. Colonial had already closed down its other main line, which transports diesel and aviation fuels.

The pipeline, a crucial artery in the nation's fuel supply network, runs from the Houston area to New York harbour and includes more than 5,500 miles of pipeline, most of it underground. It provides nearly 40 per cent of the South's gasolene.

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.

Gasolene prices have been on the rise even before the pipeline shutdown. Harvey's devastating strike on the Gulf Coast has prompted one of the summer's largest one-week price surges, AAA reported.

The national average for a gallon of regular gasolene has risen from about US$2.35 a week ago to US$2.45 now. The price is surging in some states such as Georgia, where the average cost per gallon of regular gas has climbed from US$2.22 a week ago to US$2.39 now.

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 storm also prompted at least eight Texas refineries to shut down, according to AAA. Nearly one-third of the nation's refining capacity is along the Gulf Coast from Corpus Christi, Texas, to the Lake Charles area.

Supply crunch

The supply crunch is already being felt in Dallas-Fort Worth, where QuikTrip, one of the nation's largest convenience store chains, is temporarily halting gasolene sales at about half of its 135 stores in the area.

The company is instead directing gasolene deliveries to designated stores across all parts of the metro area, QuikTrip spokesman Mike Thornbrugh said. And while only half the Dallas-Forth Worth area stores will have gasolene, all will remain open, he said.

"Supply is way, way off," Thornbrugh said Thursday.

The Oklahoma-based company diverted gasolene deliveries in a similar way last year in metro Atlanta, where it has about 133 stores, after the Alabama pipeline spill.

Colonial Pipeline has not indicated how long it expects the closure to last. Its workers haven't been able to evaluate the damage yet.

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

"Once Colonial is able to ensure that its facilities are safe to operate and refiners in Lake Charles and points east have the ability to move product to Colonial, our system will resume operations," the company statement said.

On the financial markets, after three days of losses linked to Harvey, benchmark US crude rose 65 cents, to US$46.61 a barrel in New York in early morning trading Thursday. Brent crude, used to price international oils, added 76 cents to US$51.49 a barrel in London. Wholesale gasolene prices rose another four cents.

- AP