Colonial Pipeline said it hopes to restart its major gasoline pipeline between Gulf Coast refiners and customers in the East and Southeast by noon Saturday, ending some market speculation about huge gasoline price spikes and shortages.
Gasoline futures surged as much as 15 percent overnight on reports that Colonial's gasoline pipeline, Line 1, and its distillate pipeline, Line 2, were shut down after a crew working on Line 1 in Shelby County, Alabama, hit the line with a track hoe, causing a fire. One person was killed and several injured.
RBOB gasoline futures for December jumped on speculation that the outage could be worse than the one on Line 1 that occurred in September, when a leak was discovered in the same county in Alabama. That disrupted shipments of gasoline primarily to the Southeast, causing temporary price spikes. Colonial said Line 2 was restarted at midnight and could be converted temporarily to carry gasoline.
"Even if they don't make it by Saturday noon, you miss four or five days. It's not a big deal. But it's a big deal for Colonial and people who bought in the panic in the futures market," said Tom Kloza, global energy analyst at Oil Price Information Service. RBOB futures were about 8 percent higher ahead of the late-morning announcement. Once Colonial reported its plans to restart the line, futures fell but remained up about 4 percent on the day at $1.48 per gallon.
The national price at the pump for a gallon of unleaded gasoline was $2.20 per gallon Tuesday, off about a half cent from Monday's average, according to AAA.