American energy supplies hit with closure of major pipeline

Credit Nick de la Canal  WFAE

The Explorer Pipeline, which has a capacity of 660,000 barrels a day, said on Wednesday it had shut its main fuel line from Houston to Tulsa, Oklahoma, as supplies dwindled.

Critical fuel pipelines from the Texas coast could be up and pumping again by Sunday, Colonial Pipeline officials said on Thursday morning. 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. It is responsible for providing roughly 40 percent of the South's gasoline. In Columbia, gas prices have steadily increased from $2.09 per gallon on August 28 to about $2.21 today.

Gas prices continued their sharp rise Thursday, while analysts warned of at least two weeks of sustained high prices for consumers - with effects hitting the petroleum market for months thereafter - as tropical storm Harvey continues to force the shutdown of key US petroleum infrastructure. The company does not have a projected restart time.

The partial closure is due to a lack of supply from idled refineries, as well as storm damage to Colonial's facilities near Lake Charles, Louisiana, according to Colonial. The portion of the system east of Lake Charles would continue to operate, though "deliveries will be intermittent and dependent on terminal and refinery supply".

Colonial said of the 26 refineries that connect to the Colonial system, 13 were located between Houston and Lake Charles, Louisiana, an area affected by the storm.

The Environmental Protection Agency released a statement Tuesday saying that almost a dozen refineries in the Harvey-impacted area were shut down, with others operating at reduced capacity.

But pipelines are the safest and most cost effective way to move oil, gasoline, jet fuel and other petroleum products around the country.

The news sent USA gasoline prices RBc1 surging to a two-year high of $1.9350 a gallon, while margins RBc1-CLc1 jumped to a two-year high of $24.38 a barrel, as Asia markets opened. And in the massive underground interstate system that is the nation's pipeline network, the Colonial Pipeline is I-95.

"We now estimate that we will be able to return to service from Houston Sunday, following an evaluation of our infrastructure and successful execution of our start-up plan", Colonial officials said.

Missouri, another state with historically cheap gas, saw prices at the pump leap 10 cents a gallon overnight.

Experts say pump prices could take weeks to come back down to earlier levels.

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