How much will Alabama pipeline leak raise gas prices?

The fuel price hikes stemming from the shutdown of a gas-transporting pipeline in Alabama are temporary, say experts, and in large part caused by panicked consumers. 

Gene J. Puskar/AP
A customer re-fuels her car at a Costco in Robinson Township, Pa.

Ten days after a major Southeast gas-transporting pipeline was shut down in Alabama because of a leak, prices at the fuel pump in surrounding states have jumped by as much as 11 percent.

Georgia’s gas prices have risen the most in the past week, by $0.23 to about $2.33 per gallon today, on average. Tennessee’s prices rose by about $0.14 to $2.13 per gallon; South Carolina’s by $0.13 to about $2 per gallon; and North Carolina’s rose by $0.12 to $2.17 per gallon today, according to GasBuddy, a website that tracks fuel prices.

“[Pipelines are the] primary vehicle for delivering gasoline to much of country,” says Patrick DeHaan, senior petroleum analyst at GasBuddy. “There’s just really no replacement for these pipelines, they are really so significant.”

Ironically, fuel costs have risen less in Alabama than in seven surrounding states – about $.07 in the last week – because there is still fuel available there from the side of the pipeline not affected by the leak, according to Mr. DeHaan. He doesn’t anticipate that the price increases will affect the Northeast states, since these states get their gas from other pipelines and refineries.

Though there have been some fuel shortages in the states surrounding Alabama, measures taken by the states and federal government are ensuring that gas is still getting to impacted states (albeit more slowly) and that price spike should be only temporary. In large part, says DeHaan, the higher prices are caused by panicked drivers  who are running out to fill up tanks and gas buckets in anticipation of major shortages. It's also possible that some gas stations are gouging customers, he adds

“People should be aware the more they rush out in a panic, the higher prices will go up; motorists have complete control over this,” says DeHaan. 

Over the weekend, some gas stations in metro Atlanta and north Georgia reported running out of gas, according to CNN Money. At other stations, cars lined up to fill up their tanks despite higher prices.

The rush came after a pipeline, which runs through 11 states from Houston to New Jersey, leaked anywhere from 252,000 to 336,000 gallons of gas near Helena, Ala. The leaky pipeline is one of two operated by Colonial Pipeline, a company that delivers 2.6 million barrels of refined oil daily, or 40 percent of the gas consumed along the East coast.

"I just came into town so this is shocking to me," Gina Dorman told US News as she filled up her nearly empty tank in Atlanta. Mr. Dorman told US News that she tried to fill up at several stations before finding one that had gas.

Since the leak was discovered, Colonial has been scrambling to restore its pipeline and to build a bypass to get fuel around the leak, according to the company. In the meantime, Colonial has been using its second pipeline to deliver gas; that one typically delivers diesel, jet fuel, and home heating fuels. Barges and trucks also have been dispatched to deliver gas to affected states by sea and by road.

To further alleviate supply restraints, the Environmental Protection Agency temporarily relaxed Clean Air Act requirements in 13 counties, easing restrictions on the type of gas that can be used. The governors of Alabama, Georgia and North Carolina declared states of emergency Thursday to lift rules limiting the number of hours fuel-delivery drivers can work, allowing them to travel further to pick up gas and deliver it to where it’s most needed.

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