Colonial Pipeline Restarts: How Long to Recover?
By Samantha Oller on Nov. 08, 2016HELENA, Ala. -- The Colonial Pipeline’s main gasoline line restarted on Nov. 6, but it could take several days for the fuel supply chain to return to normal.
That’s according to the latest update from pipeline owner and operator Colonial Pipeline Co. This past weekend, repair crews were able to remove the damaged portion of Line 1, which carries gasoline through the Southeast and up the East Coast, and install a bypass segment. It could be until mid-November before the original pipeline is fully operational and the bypass removed.
Gasoline shipments are expected to reach the terminus of the pipeline in Linden, N.J., by Nov. 9. Meanwhile, the weeklong pipeline shutdown is playing out a bit differently from the September incident. The following is the latest on retail prices, supply and more ...
Retail price moves mixed
Retail gasoline averages rose several cents week over week in a couple of the states supplied by the Colonial Pipeline. This includes Georgia, where the state retail average was up 7.8 cents per gallon (CPG) from the week prior to reach $2.24 per gallon on Nov. 7, according to GasBuddy. In South Carolina, the retail average was up 3.0 CPG to $2.03 per gallon.
However, in other states—Alabama, Virginia and North Carolina—retail averages were either flat or down week over week.
Weekly data from the Energy Information Administration (EIA) for the Lower Atlantic region, or PADD 1C, which includes the six states from West Virginia to Florida, shows a regular-grade average of $2.17 per gallon on Nov. 7. This is basically unchanged from the week prior, and 6 CPG below the national average price.
Supply Begins to Normalize
Retail prices may stay aloft for several days until supply normalizes, analysts said.
“Effectively, the process is going to take time because they have to figure out how to reschedule all the deliveries ... all of that requires a fair amount of logistical juggling,” Sandy Fielden, director of research, commodities and energy for Morningstar, Austin, Texas, told Reuters.
That said, the supply situation for the Oct. 31 shutdown of Line 1 was different than the more disruptive September shutdown. Gasoline stocks in PADD 1C were at fairly high levels just before Oct. 31, or almost 20% higher than the five-year average, according to EIA. This compared to the September shutdown, which triggered record shifts in gasoline stocks in PADD 1C and the Gulf Coast states (PADD 3) for the week ending Sept. 16. In that week, PADD 3 stocks rose almost 4.8 million barrels, while stocks fell almost 6 million barrels in PADD 1C. By the end of the following week, stocks rose a little in both PADDs, showing that resupply had finally started reaching the lower Atlantic states.
New Jersey’s Two-For Price Increase
In New Jersey, which just implemented a 23-CPG increase to its gasoline tax last week, the Colonial Pipeline shutdown could also have price reverberations—specifically for unbranded retailers who may have problems finding supply in the days ahead, Tom Kloza, global head of energy analysis, told NJ.com.
“You may see unbranded stations, such as Raceways and Deltas wobble up a bit (in price),” Kloza said. “It’s a little hiccup, but not a cardio infarction.”
According to NJ.com, citing GasBuddy data, street prices at those sites rose over the weekend from around $1.90 per gallon Thursday, Nov. 3, to more than $2 per gallon by Monday, Nov. 7.