NATIONAL
VETERANS EMPLOYMENT & EDUCATION COMMISSION
TOPIC 1: ECONOMY
A leak has caused the
closure of a crucial pipeline that carries gasoline to the eastern United
States, a disruption that threatens to drive up prices and leave service
stations without fuel to sell. A section of the Colonial Pipeline, which runs
from Houston to New York, has been closed since September 9 after a spill of
roughly 250,000 gallons was discovered in rural Shelby County, Alabama. The
major pipeline, one pipe of which has been severed, provides gasoline for an
estimated 50 million people on the East Coast each day, according to company
estimates. The cause of the leak has yet to be determined, according to the
company’s most recent statement.
The pipeline’s
supervisor has said full services will not be restored until at least next
week. The closure has set off an industry-wide scramble as suppliers seek
alternative ways to transport gasoline to the East Coast. Prices have yet to
move much. They are only up a penny or two in the last week in states such as
Georgia, South Carolina and Tennessee, according to AAA. But gas prices could
spike by as much as 15 cents per gallon or more in those three states, as well
as North Carolina and Virginia, in the next week according to GasBuddy.com.
Ships have already been
dispatched to carry fuel from Texas to New York as part of the effort. There
are also likely to be far more tanker trucks on the road carrying gasoline than
normal. But pipelines are by far the cheapest way to move gasoline or oil, so
any alternative will raise costs. And not every station will be able to get the
gasoline it needs. The pipeline operator said that based on its current
projections, parts of Georgia, Alabama, Tennessee, North Carolina and South
Carolina will be the first markets to suffer potential supply disruptions.
The governors of Alabama
and Georgia have already declared states of emergency. The Northeast markets
such as New Jersey at the end of the pipeline are less likely to see an impact
because they can get gas from other locations. Gas prices typically fall at
this time of year. Thursday, September 15, was the day that stations in most of
the country could start using the cheaper winter blend of gasoline rather than
the summer blend, which is formulated to combat smog. It’s more than likely
that people are going to be seeing a 5 to 10 cent a gallon increase at a time
they’re normally seeing a 5 to 10 cent a gallon price drop.
Mansfield, Ohio, a fuel
distributor, has warned its customers to take fuel savings measures and to
place their orders early. The company said the supply of gasoline is currently
very thin along the closed pipeline, and that it was trucking in supplies from
the coast to meet demand. The company said it was treating the situation “with
the same importance and urgency as a natural disaster.”
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