Oil spills hit on land, too: Aging pipelines imperil Midwest
Oil spills in recent weeks, from Canadian-owned pipelines that supply Midwest refineries, are another sign of nation's aging infrastructure. Latest spill expected to raise Midwest gas prices by 30 cents a gallon for several weeks.
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Mark Zupan, dean of the Simon Graduate School of Business at the University of Rochester in Rochester, N.Y., says the reason why Canada plays such a major role in US oil imports is its proximity and low cost of operating and maintaining shipping channels. Mr. Zupan says the Enbridge pipeline that broke last week had a daily capacity of delivering up to 670,000 barrels, or 28 million gallons per day. Having it out of commission for what is an expected six to eight weeks will have “an appreciable impact on supply,” he says.Skip to next paragraph
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Despite such a prominent role as a major US oil supplier, Enbridge has a tarnished reputation among environmentalists who cite its high volume of spills, 610 between 1999 and 2008 according to federal and company data, which is responsible for about 132,000 barrels, or 5.5 million gallons of oil released into the environment. According to a May 2010 report on the company by the Polaris Institute, an Ottawa think tank, the company had 93 spills in 2008 alone, a 43 percent increase from the previous year.
Federal regulators are increasing their attention on the company. The Pipeline and Hazardous Materials Safety Administration, an agency that operates under the US Department of Transportation, is denying the company’s plans to restart the Michigan and Illinois pipelines unless they go through a rigorous safety review. In August, Enbridge was fined $2.4 million for violations of federal pipeline safety regulations related to a 2007 pipeline explosion that killed two workers in Clearbrook, Minn.
The Chicago area spill will raise Midwest gas pump prices about 30 cents per gallon, and its impact on prices is expected to last for about two months, says Tom Kloza, editor of the Oil Price Information Service, a service that tracks petroleum pricing. Mr. Kloza says that the oil spill in the Gulf of Mexico, which released a much greater volume of oil, is a factor in the spike because of the increased public and government scrutiny.
“If this was not 2010 and we did not have the legacy of BP,” the combined Enbridge spills “would probably inspire a little bit of a market pop and not be measured out in weeks and months,” he says.
Because the Gulf Coast has a greater supply of oil and easier access to foreign supplies, gas prices along the coast remained stable, Kloza says. This makes it different than the Midwest market, which primarily depends on its Canadian suppliers.