U.S. Fuel Supply Troubles Ease as Pipeline Shipments Resume

Updated on
  • Fuel suppliers use alternate methods to deliver gasoline
  • National, state waivers helping reduce shortages in Southeast

A surge in gasoline futures started to reverse as gas station operators began receiving fuel shipments along portions of the U.S. Eastern seaboard.

Colonial Pipeline is building a line that will bypass a segment of its 1.3 million-barrel-a-day gasoline mainline that now needs federal government approval to restart after a spill Sept. 9. The bypass connection will be finished this week, Alabama Governor Robert Bentley said Monday in a press conference.

The company completed gasoline shipments on a pipeline that normally moves diesel over the weekend to markets that were in need of fuel. Gasoline outages were reported from Nashville, Tennessee, to Atlanta as motorists filled their tanks.

“There’s a phenomenon in Tennessee -- when there’s a rumor of snow, everybody rushes to Kroger and buys milk and bread. Even if it doesn’t snow, the grocery store is still out of milk and bread,” Mike Williams, executive director of the Tennessee Petroleum Council, said by phone. “This was very similar. We didn’t really have a shortage.”

Southeast Outages

Nashville has received supplies since Saturday on Colonial’s alternative pipeline, and Valero Energy Corp. is supplying the market from its Memphis, Tennessee, refinery. Still, word of the shortage caused one Tennessee retailer to sell out of an 8,500-gallon delivery in six hours. A shipment that large normally lasts three days, Emily LeRoy, executive director of the Tennessee Fuel and Convenience Store Association, said in an e-mailed statement.

“Although things got really tight there, they’re starting to loosen up,” Williams said. “The bypass is going to be ready sometime this week. Things should really be getting back to normal.”

Gasoline stations in Georgia and Alabama ran out of fuel despite increased deliveries and waivers to trucking rules that allowed for around-the-clock shipments.

“We have several stations out of gasoline,” Angela Holland, president of the Georgia Association of Convenience Stores, said in a telephone interview. “We also have fuel trucks running as much fuel as we can possibly secure.”

Alabama faced some retail outages since Colonial’s spill, “but so far they are limited,” J. Bart Fletcher, president of the Petroleum & Convenience Marketers of Alabama, said by e-mail.

Bentley said Alabama retail gasoline has jumped 20 cents a gallon in a week.

“Is that price gouging?” he said. “No.”

Tankers, Trucks

Gasoline suppliers have leaned on alternative shipping routes via barges, tankers, trucks and pipeline to supplant deficits from Colonial’s shutdown. A tanker that typically hauls supplies to Florida from Gulf Coast refineries completed a delivery to Savannah, Georgia, this weekend, and arrived Monday in Charleston, South Carolina, for another, vessel-tracking data compiled by Bloomberg show.

South Carolina Governor Nikki Haley issued an executive order on Monday that waives some federal fuel-transportation load requirements. She also extended the waiver that allows commercial drivers to work longer hours to get fuels to market.

“We are hanging in there,” Michael Fields, executive director of the South Carolina Petroleum Marketers Association, said in a telephone interview. “Virtually anyone who has access to Charleston is going there regardless of what part of the state they are in.”

RaceTrac Petroleum is rerouting and adding trucking routes to ensure its stores have fuel, spokeswoman Karissa Bursch said by e-mail. Kinder Morgan Inc.’s Plantation Pipeline, which ships 700,000 barrels a day of products to Washington, D.C., from Louisiana, is operating at capacity, according to company spokeswoman Melissa Ruiz.

October Nymex gasoline futures settled lower for Monday at $1.4208 a gallon, the first decline in three days.