Gasoline prices spike as Colonial begins bypass around damaged line

Before you go, we thought you'd like these...
Before you go close icon

By David Gaffen

Sept 18 (Reuters) - Retail gasoline prices surged due to continuing problems with Colonial Pipeline Co's gasoline line that carries fuel to the U.S. East Coast, as the company started to construct a bypass line around the leak.

Colonial said on Saturday evening that it would construct a bypass that circumvents the leak, which occurred more than a week ago in Shelby County, Alabama. It is unclear when construction will be completed but the company has previously said it anticipates reopening the line, which can carry up to 1.2 million barrels of gasoline a day, later this week.

The volume of the spill is estimated to be between 6,000 and 8,000 barrels.

The average price of a gallon of regular gasoline in Georgia rose to $2.26 as of Sunday morning, according motorists' advocacy group AAA, up more than six cents overnight and more than 15 cents in a week. Prices were up 4 cents in North Carolina to $2.136 and 4 cents in South Carolina to $2.011.

PHOTOS: Varying gas prices across the U.S.

19 PHOTOS
Gas prices
See Gallery
Gas prices
Heavy traffic clogs the 101 Freeway as people leave work for the Labor Day holiday in Los Angeles on August 29, 2014. A Labor Day travel prediction by the American Auto Association (AAA) expects that 34.7 million Americans will journey 50 miles or more from home during the Labor Day holiday weekend, mainly due to lower gas prices and a rebounding economy. (Photo by Mark Ralston, AFP/Getty Images)
People walk past a BP gas station, one of the few remaining gas stations left in lower Manhattan, which is scheduled to close next year on July 15, 2014 in New York City. In 2004 Manhattan had over 60 gas stations, there are only 39 now and the number continues to fall. With prices for apartments in Manhattan at an all time high, developers prefer gas stations as investments, due to their location on busy corners and the relative ease in tearing them down. (Photo by Spencer Platt/Getty Images)
MILL VALLEY, CA - JULY 03: A customer washes his windows as he gets gas at a Chevron gas station on July 3, 2014 in Mill Valley, California. As the conflict in Iraq coninutes to escalate, gas prices are being pushed up to the highest level since 2008. The average price in June for a gallon of regular gas was $3.67. (Photo by Justin Sullivan/Getty Images)
PORTLAND, ME - JULY 3: Gas station signs at the corner of Washington Avenue and Cumberland Avenue in Portland on July 3, 2014. (Tim Greenway/Portland Press Herald via Getty Images)
Customer Shelly Grabill fuels her vehicle at a Road Ranger gas station in Princeton, Illinois, U.S., on Tuesday, June 17, 2014. Gasoline in the U.S. climbed this week, boosted by a surge in oil, and is expected to reach the highest level for this time of year since 2008. Photographer: Daniel Acker/Bloomberg via Getty Images
CHICAGO, IL - MAY 22: Customers purchase gasoline at a Marathon gas station on May 22, 2014 in Chicago, Illinois. Marathon Petroleum Corp. has agreed to purchase Hess gasoline stations for $2.6 billion. The acquisition will expand Marathon Petroleums retail presence from nine to 23 states. (Photo by Scott Olson/Getty Images)
Samir Cook fills up his vehicle at a city-run station on Saturday, July 19, 2014, in Somerset, Ky. The station on the outskirts of Somerset opened to the public on Saturday, selling regular unleaded gas for $3.36 a gallon. In the first three hours, about 75 customers fueled up at the no-frills city station, where there are no snacks, no repairs and only regular unleaded gas. The city’s mayor says he hopes the no-frills station will lower gas prices around town. (AP Photo/Bruce Schreiner)
An Egyptian rides his bicycle past a gasoline station in Cairo, Egypt, Saturday, July 5, 2014. Egypt's government raised the prices of fuel by up to 78 percent starting Saturday, following on a promise to cut subsidies that eat up nearly a quarter of the state budget, the official news agency reported. The country's successive leaders have balked at reducing them because half of the country's 85 million people live at or below the poverty line of $2 a day and rely on government subsidies of wheat and fuel for survival. (AP Photo/Amr Nabil)
Traffic moves past a Doral, Fla. gas station, Wednesday, May 21, 2014. If the price of gasoline looks familiar this Memorial Day that’s because it is. For the third year in a row, the national average will be within a few pennies of $3.64 per gallon. (AP Photo/J Pat Carter)
In this Wednesday, June 4, 2014 photo, Marty Mascio of Pembroke Pines, Fla., selects a grade of gasoline as he fills up his car at a Chevron station in Pembroke Pines. Violence in Iraq is pushing U.S. gasoline prices higher during a time of year they usually decline. The national average price of $3.67 per gallon is the highest price for this time of year since 2008, the year gasoline hit its all-time high. (AP Photo/Wilfredo Lee)
A sign at a BP filling station says regular gas is $2.99, 9/10ths per gallon in Lakewood, N.J., Tuesday, Nov. 12, 2013. Prices for regular gas at several gas stations in the area have dropped below $3.00-a-gallon. (AP Photo/Mel Evans)
The pump shows the purchase of fuel after gas prices dropped to $3.17 at a Marathon Station in Kokomo, Ind., Thursday, Oct. 24, 2013. dramatic local price swings are happening despite relatively stable oil prices and a national average gasoline price that has hovered around $3.50 per gallon for three years. In 2008, the last time local prices were this volatile, oil spiked to $145 a barrel in July, then plunged below $40 in late December as the global financial crisis sent energy markets reeling. The national average gasoline price ranged from $1.62 to $4.11 a gallon. (AP Photo/Michael Conroy)
FILE - This Friday, Sept. 27, 2013, file photo, shows a gas pump in Montpelier, Vt. The nationwide average price for a gallon of gas fell a penny Friday, Nov. 8, 2013, to $3.21. That’s the lowest average price since December 2011. (AP Photo/Toby Talbot, File)
Gas prices drop to $3.17 at a Marathon station in Kokomo, Ind., Thursday, Oct. 24, 2013. Local gasoline prices are swinging up and down ever more drastically, a result of a national fuel system that is operating with a shrinking margin for error. (AP Photo/Michael Conroy)
In this Monday, July 1, 2013 photo, vehicles are reflected in a sign advertising unleaded gas for $2.99 at a QuikTrip station in Greenville, S.C. Gasoline prices are on a summer slide, giving U.S. drivers a break as they set out for the beach and other vacation spots for the Fourth of July. (AP Photo/Rainier Ehrhardt)
A sign with gas prices is shown at a gas station Monday, July 1, 2013, in Hialeah, Fla. Gasoline prices are on a summer slide, giving U.S. drivers a break as they set out for the beach and other vacation spots for the Fourth of July. (AP Photo/Alan Diaz)
Chris King fills up his truck at a gas station displaying a price of $4.59 for a gallon of self-service regular gas Friday, Feb. 22, 2013, in San Diego. Gas prices have spiked between 57 and 59 cents over the past 30 days in California. (AP Photo/Gregory Bull)
Vehicles drive past a gas station in Andover, Mass., Friday, May 8, 2015. With more money in their pockets thanks to lower gas prices and an improved job market, AAA expects more than 37 million Americans to travel for Memorial Day, the most since 2005. (AP Photo/Elise Amendola)
of
SEE ALL
BACK TO SLIDE
SHOW CAPTION +
HIDE CAPTION

Local media reports have shown gasoline lines forming across the U.S. Southeast due to the shutdown and analysts believe that retail prices could be affected for more than two weeks. New York gasoline futures are up 9 percent in the past week, and are expected to rise when trading overseas begins on Sunday evening.

Colonial shut its main gasoline and distillate lines that run from the Gulf Coast to the East Coast on Sept. 9 after the leak was discovered. The damaged Line 1 can carry 1.2 million barrels of gasoline per day and runs from Houston to Greensboro, North Carolina.

Several states in the Southeast have issued emergency orders waiving certain rules that restrict transport of fuel by road in order to keep filling stations stocked with fuel. It is unclear how quickly the pipeline will be fixed.

"I don't take much solace in Colonial's updates," said Patrick DeHaan, a petroleum analyst who writes a blog called Gas Buddy.

He said prices are moving up roughly one-tenth of 1 cent every hour and that it could take several weeks before prices return to normal.

A Colonial spokeswoman had no immediate response to DeHaan's assertion.

However, James Williams of WTRG in London, Arkansas, said the projected timeline for restart is possible, even with testing required by federal authorities. He also said consumers' tendencies to top off their tanks when this type of news hits is not necessarily cause for alarm, either.

"The shortage appears greater because people are filling up more often so you are certain there is a shortage because there are lines at the station but on average they are only purchasing the quarter of a tank of gas instead of three-quarters," he said.

DeHaan said prices at non-branded chains were rising more quickly than those with larger, branded operations, because larger regional gasoline companies have the ability to tap supply more quickly.

Coming into this week, U.S. East Coast inventories of total motor gasoline <GL-STK-1-EIA>, which includes blending components, was higher seasonally than in the past 10 years, according to the U.S. Energy Department. (Reporting By David Gaffen and Dan Freed in New York; Editing by Bill Trott)

Read Full Story

Sign up for Breaking News by AOL to get the latest breaking news alerts and updates delivered straight to your inbox.

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners