EPA: Crews closing in on source of Ill. oil leak that’s closed pipeline and boosted gas prices

By Karen Hawkins, AP
Sunday, September 12, 2010

EPA: Crews closing in on source of Ill. oil leak

CHICAGO — A federal official said Sunday that crews believe they’re closing in on the source of a leak that has forced the closure of a Chicago-area oil pipeline, which analysts say has caused a sharp spike in gas prices across the region.

Sam Borries, on-scene coordinator for the U.S. Environmental Protection Agency, said workers are “actively excavating” to find the leak so the bad section of pipe can be replaced and the line reopened.

The closure of the pipeline owned by Enbridge Energy Partners has disrupted the supply of crude oil to Midwestern refineries, and already translated into higher prices at the gas pump for consumers, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

“It’s kind of like having a blockage of an artery,” Kloza said. “The patient is going to have a few symptoms, and one of the symptoms is going to be higher prices on a short-term basis.”

Pipeline owner Enbridge Energy Partners has until noon Tuesday to stop the flow of oil. Borries said Sunday that that he misspoke earlier in saying Enbridge was ordered to stop the leak by Monday.

He said it appears the company will make the deadline, and Enbridge spokeswoman Gina Jordan said the company is “working very hard to ensure that we meet all of the EPA’s deadlines.”

Consequences for not doing so vary and ultimately could result in the EPA taking over on site. Borries said he doesn’t expect that to happen and that the government prefers to have the “responsible party” lead the cleanup.

Nearly 200 workers have been on site 24 hours a day since the leak was discovered Thursday, Borries said. He estimates 7,000 barrels of water and oil have been recovered from the site so far.

The pipeline’s initial closure boosted oil prices more than $2 a barrel Friday amid concerns about how long the supply may be disrupted.

Prices already have shot up at some Chicago and Milwaukee gas stations. In Chicago, the average gas price jumped seven cents from Saturday to Sunday, according to AAA. Some stations increased their price for a gallon of regular from $3.05 on Friday to $3.29 on Sunday.

In Milwaukee, the average price Friday was $2.70, according to AAA, but some stations were selling a gallon for $2.89 or more Saturday. Cities across Indiana, Michigan and Ohio had similar increases over the weekend.

Kloza said gas station owners are responding to increases in price from their suppliers, not taking unfair advantage of the situation. Dealing with the volatility in price from suppliers is “like having an adjustable rate mortgage that adjusts every day,” he said.

He predicted gas prices would go up as much as 30 cents a gallon, depending on how long the pipeline is out of operation.

“The leaves may be falling before the gas prices are,” he said.

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