Business
Gas And Oil Set To Jump Following Colonial Pipeline Explosion
On Monday, Colonial Pipeline, the largest pipeline in the country, suffered its second shutdown in as many months. With 13 states relying on the pipeline for gas, diesel, and jet fuel, just how damaging can a shutdown be? Should investors worry about the price of gas and oil?
Colonial Pipeline Second Shutdown After Explosion
Monday’s explosion saw one man killed and five other injured as a work crew breached the pipeline and ignited the gasoline within while performing maintenance in Shelby County, Alabama. While the explosion appears to be an accident and there is no suspicion of terrorism, there is still plenty to worry about.
This is the second shutdown in just a few weeks for the pipeline. In September, there was a partial closing of the Colonial Pipeline’s Line 1, a major gas artery, because of a 6,000 barrel per day leak which was discovered. Thanks to bad weather causing gasoline fuels to settle over the site, the pipeline was closed for almost two weeks, causing shortages and fuel price increases in the southeast, particularly Georgia, Alabama, and the Carolinas. Now, with a major shutdown, the pipeline is causing chaos with oil and gas once again.
The Colonial Pipeline is the biggest pipeline in the U.S at 5,500 miles long and pumps 2.5 million barrels of gas per day, or about a third of the gas consumed by the east coast. It’s a fuel source for the Southeast and connects directly to several major airports. Both of the pipeline’s shipping lines were affected by the explosion, meaning air travel could also be affected, though reliant airports have said they have sufficient fuel for the time being. During the last shutdown, with just one line closed, gas prices in the Southeast rose as much as 20 cents per gallon. With both lines closed for weeks not days, consumers can expect to feel the explosion in their wallet.
As a result, the price of gasoline futures has shot up by as much as 15%. Shipping costs for fuel tankers have gone up by as much as 77%. As a consumer, the best thing to do is stock up on fuel. But analyze how fuel shortages can affect your investing. For example, Shares of PBF Energy Inc., which owns plants in Delaware and New Jersey, shot up more than 10% Tuesday.
Find out more about this news when you watch this video from ABC News:
Expect oil and gas service provider shares to spike UP as the country scrambles to replace the shortage of oil supply created by the pipeline explosion.
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