Midwest pipeline leak boosts gasoline prices; unclear when pipeline will reopenBy Chris Kahn, AP
Monday, September 13, 2010
Oil, gasoline up on US crude pipeline leak
NEW YORK — Retail gasoline prices increased Monday as crews continued to work on a broken Midwest pipeline that transports a quarter of the oil imported from Canada to the U.S.
In its weekly report on gasoline pump prices, the Energy Department’s Energy Information Administration said Monday that the national average for a gallon of unleaded regular was $2.721, up about 4 cents from a week ago. The Midwest showed the biggest jump in regional prices, up 10.4 cents from a week ago to $2.778 a gallon. The average pump price in Chicago was $3.018, up almost 16 cents from a week ago.
The broken Enbridge Energy crude oil pipeline is in Romeoville, Ill., about 30 miles from Chicago. It is part of a system that transports oil from western Canada to U.S. refiners. Marathon Oil Corp., which operates a refinery in Robinson, Ill., about 225 miles south of Chicago, would not comment on whether it faced shortages because of the pipeline shutdown. On its website, Marathon says the refinery produces gasoline and diesel fuel. It has a capacity of 206,000 barrels per day.
Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said the pipeline break helped push wholesale gas prices in the Midwest about 30 cents per gallon higher than the West Coast and 15 to 20 cents per gallon higher than the East Coast.
The jump in prices is “based mostly on perception,” Kloza said, as the U.S. continues to sit on the largest supply of oil and petroleum-based fuels on record. Fuel supplies may be tighter in the Midwest as farmers harvest crops and push diesel demand higher, but refineries are still receiving oil despite the pipeline problem, he said.
“In the meantime, if you’re someone who needs to buy 100,000 barrels of gasoline or diesel by the end of this month, there’s probably a little bit of panic setting in,” Kloza said. The price of oil and gasoline have surged on spot markets as doubts linger about when Enbridge can get the pipeline back up and running.
That’s pushed gasoline and diesel prices higher, Kloza said.
According to the Oil Price Information Service, motorists in Warren, Ind., have been stung with the biggest price hikes. Pump prices there have soared 34.7 cents per gallon since Sept. 1.
Boyd, Ky., saw an increase of 34.3 cents per gallon in the same time, and Hillsdale, Mich. saw prices jump 32.4 cents per gallon.
Enbridge, based in Houston, wouldn’t say when the pipeline would be operating again. An estimated 6,100 barrels of crude oil were spilled last week after the pipeline broke.
Also Monday, a 91-mile oil Enbridge pipeline that runs from Ontario, Canada, to New York was shut down following the discovery of a possible leak near Buffalo, N.Y.
Enbridge spokesman Glenn Herchak said the 70,000-barrel-a-day line from Westover, Ontario to New York was shut down “as an abundance of caution” when about a gallon of a petroleum-based product was discovered during a sewer installation project. Crews had cleaned up the product and were working to find the source, he said. Herchak did not know how long that line would be shut down.
The futures contract for benchmark crude also increased Monday, rising above $77 a barrel. Prices followed the stock market higher as investors cheered reports that Chinese industrial production was accelerating. China said over the weekend that manufacturing rose 13.9 percent in August from a year ago, faster than the 13.4 percent growth pace in July.
A weaker dollar also contributed to rising oil prices by making crude cheaper for investors holding other currencies.
Benchmark crude for October delivery added 74 cents to settle at $77.19 a barrel on the New York Mercantile Exchange. In London, Brent crude rose 87 cents to settle at $79.03 a barrel on the ICE Futures exchange.
In other Nymex trading in October contracts, heating oil rose 1.83 cents to settle at $2.1227 a gallon and gasoline added less than a penny to settle at $1.9806 a gallon. Natural gas gained 5.5 cents to settle at $3.938 per 1,000 cubic feet.
Associated Press writers Pablo Gorondi in Budapest, Hungary and Alex Kennedy in Singapore contributed to this report.
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