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Gasoline supplies still tight in some U.S. states after Colonial restart
November 7, 2016 / 4:11 PM / a year ago

Gasoline supplies still tight in some U.S. states after Colonial restart

NEW YORK, Nov 7 (Reuters) - Retail U.S. gasoline prices remained elevated in some states on Monday following the restart of Colonial Pipeline’s main gasoline line early on Sunday after a fatal explosion last week.

Prices at the pump in Georgia, one of the most affected states, were flat overnight and up 8 cents from a week ago to average $2.24 a gallon on Monday, motorist advocacy group AAA said.

An outage in line, which can carry 1.3 million barrels of gasoline daily from the U.S. Gulf Coast to the New York area, restricted gasoline supplies to millions of Americans in the Southeast and some in the Northeast. Markets in the Northeast were less affected as Europe rushed to make up for lost supplies.

Prices could remain elevated for several days as flows on the pipeline normalize after the nearly week-long outage, 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,” said Sandy Fielden, director of research, commodities and energy at Morningstar in Austin, Texas.

“The market reaction is going to be much more pronounced if you have something that goes wrong.”

The U.S. Environmental Protection Agency (EPA) has issued waivers to allow Colonial to mix different grades of gasoline once shipments resume. Governors of some Southeast states have issued executive orders to lift a federal government limitation on the hours a driver can transport gasoline to ensure adequate supply.

Colonial restarted the line early on Sunday after replacing the damaged pipeline section with a new segment as a permanent fix.

The explosion late last Monday killed one worker and injured five others when a trackhoe struck the line during repairs of a September gasoline spill, which was Colonial’s biggest in nearly two decades.

U.S. gasoline futures jumped as much as 15 percent on news of the explosion but ended the week about 6 percent lower as Colonial said it would restart the line quicker than many had anticipated. On Monday, U.S. gasoline futures were down 1 percent, the weakest component in the energy complex.

The September spill led to an outage of more than 12 days and most traders expected longer shut down this time due to the blast and the fatality.

But experts said unlike the last incident, the cause was known and there were fewer uncertainties involved, allowing Colonial to restart the line quickly. (Reporting by Devika Krishna Kumar in New York; Editing by Meredith Mazzilli)

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