Pipeline partial closure may cause temporary gasoline price increase

Staff Reports • Updated Sep 17, 2016 at 8:00 PM

The Colonial Pipeline, supplying much of the East Coast running from Texas to New Jersey, was partially closed since Sept. 9 when a leak was discovered in Alabama. 

The company originally anticipated having the pipeline reopened by this weekend, but bad weather has delayed the fix. This partial closure has caused tighter supply for some southeast and Mid-Atlantic states.

The southeast has a fairly healthy supply of crude and gasoline inventories, but the market relies on just-in-time inventory and could be disrupted by an extended partial closure of the pipeline. States that could be directly impacted by tighter supply and slightly higher prices include Alabama, Mississippi, Tennessee, Georgia, South Carolina, North Carolina and Virginia. 

“While there is plenty of gasoline and crude supply, the pipeline is the most efficient way to deliver the product to Tennessee,” said Stephanie Milani, Tennessee public affairs director for AAA. “I anticipate tanker trucks from Memphis and Kentucky will bring in gasoline supplies to Knoxville, Chattanooga and Nashville over the next several days.”

Colonial Pipeline has a very solid history of making sure that operations are quickly restored. According to Tom Kloza, global head of energy analysis for Oil Price Information Service, the Colonial Pipeline could be shipping a normal volume of gasoline next week.

“I do not anticipate areas where motorists won’t be able to find gasoline, but you could see some locations in Tennessee where there are occasional outages of regular gas,” said Kloza. “This will not persist, and indeed the price increases you’ll see do not represent a trend.”

On Friday, Tennessee’s gasoline average was $2.01, an increase of 1 cent from Thursday.

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