Alabama pipeline leak: Why US gas prices are on the rise

After an explosion and fire in Alabama shut the largest fuel pipeline in the US, US consumers are feeling the pinch of higher gas prices.

First Look

Wondering why you’re feeling the pinch at the pump again?

It’s déjà vu all over again for car owners after a second accident on an Alabama refined petroleum pipeline operated by the Colonial Pipeline Co. caused gas prices to skyrocket across the East Coast this week.

“[Pipelines are the] primary vehicle for delivering gasoline to much of country,” Patrick DeHaan, a senior petroleum analyst at GasBuddy, told The Christian Science Monitor after an earlier pipeline leak in September. “There’s just really no replacement for these pipelines, they are really so significant.”

In September, officials at Colonial were forced to shut down the pipeline due a leak, causing fuel prices in the region to leap 11 percent in little more than a week. Met with climbing demand among consumers, some gas stations ran out of fuel. At others, drivers lined up to fill their tanks.

Colonial carries fuel from its refining center in Houston to New York Harbor, a supply route that has the potential to determine fuel prices along the East Coast, should the unexpected occur. September’s pipeline leak – which could mean a loss of up to 336,000-gallons –  resulted in a 12-day long shutdown and dry pumps in several southern states.

According to the head of oil products research at Energy Aspects Ltd, Robert Campbell, the southeastern United States is “highly dependent on pipeline supplies from Colonial, and, ultimately, Colonial flows form the baseline of US East Coast supply,” Bloomberg News reports.

As a result of Monday’s explosion, gas prices for December delivery fuel rose more than 21 cents on the New York Mercantile Exchange. Share prices for several major East coast refineries, including those operated by Phillips 66 and Valero Energy, also rose after the accident.

This week’s pipeline shutdown occurred after work crews accidentally struck the pipeline with a track hoe and ignited gasoline, Colonial reported. One worker died and five were injured, out of the fewer than ten workers on the pipeline.

“The flames were massive, a lot higher than the trees. I got about 2,000 feet from the flames,” resident Jeremy Hughes told CBS News.

Thirty-two acres of parched Alabama land burned in the resulting wildfires, forcing people to evacuate the area, including the work crew that was at the explosion site.

“Colonial’s top priorities are the health and safety of the work crew on site and protection of the public,” the company said in a statement.