Two separate occurrences that interrupted operations of the Colonial Pipeline also forced states to declare emergencies, which in turn spurred a wide-spread run on fuel.

By David Bennett, Senior Editor

Two recent, high-profile incidents that struck the Colonial Pipeline in Shelby County, Ala. were exacerbated by a federal transportation policy that inadvertently caused a run on gas in North Carolina and other southern states that are supplied by the enormous pipeline.

The initial 12-day interruption in gasoline supply occurred in mid-September and was the result of a pipeline leak about 30 miles south of Birmingham, Ala. The second incident, which took place on Oct. 31, was an explosion tied to a worker hitting a nearby section of the pipeline with excavation equipment.

The Colonial network is the largest petroleum product pipeline system in the country. It runs continuously at or near full capacity, delivering about 2.6 million barrels per day via a 5,500-mile system that connects 29 refineries and 267 distribution terminals.

After the September leak, Colonial used one of two main lines to move gasoline as it made repairs, but it still led to days of dry pumps and higher gas prices in Alabama, Georgia, Tennessee and the Carolinas while repairs were made.

STATES OF EMERGENCY
It was only a few hours after the September rupture that Alabama Gov. Robert Bentley and Georgia Gov. Nathan Deal each issued executive orders to declare states of emergency over concerns about gasoline shortages in areas served by the pipeline.

Such emergency orders are necessary to waive existing transportation rules and allow fuel delivery truck drivers in each state to exceed maximum hour limits established by the U.S. Department of Transportation and prevent gasoline outages. The orders apply only to trucks that are transporting fuel. Essentially, a state of emergency has to be declared before officials can get the waiver to place more fuel tankers on the road.

After the September service break at Colonial, regional gas stations and convenience retailers who sell fuel were forced to obtain gas from the most dependable sources, in the timeliest manner to keep gas pumps operating. During that period, many more tanker trucks were on the highways hauling fuel from locations as far away as Texas to keep stations in places like Tennessee and North Carolina supplied with gasoline.

Large operators who deliver their own fuel such as Knoxville, Tenn.-based Pilot Flying J were able to withstand the fuel shortage during the September incident. However, if the Colonial Pipeline had been down longer, the more difficult it would have been to “maintain our supply of gasoline,” said Brad Jenkins, vice president of petroleum supply and distribution for Pilot Flying J.

Gary Harris, executive director of North Carolina Petroleum & Convenience Marketers, said most of the fuel used by gas stations in the Triangle area comes from the pipeline. When North Carolina Gov. Pat McCrory declared a state of emergency after the rupture of the pipeline, the immediate results were dramatic.

“Many stores, especially independent-branded stations were drained dry after the governor declared a state of emergency and the press panicked the populace,” Harris said. “Supply and allocation were severe and before the announcement of the repair, supply was incredibly tight, down to at least a one-third of the regular supply in the state. Most branded marketers did the best with the allocation they could get.”

A SECOND TIME
The Oct. 31 explosion happened a few miles from where the Colonial pipeline sprang a major leak. Gasoline price futures in North Carolina spiked on Oct. 31 by as much as 15% after the explosion.

Again, state governors issued emergency orders before gas prices rose.

Emily LaRoy, executive director of the Tennessee Fuel and Convenience Store Association, said such a state of emergency was also levied in Tennessee this past September, causing a run on gas in the Volunteer State similar to what befell North Carolina station operators.
“That’s what happened here too and we’re having discussions on it,” LaRoy said. “Because a state of emergency has to be declared before you can get the waiver, it’s sort of a Catch-22. I think we would have asked for one a lot earlier in the week, but you have to declare a state of emergency, which can cause a panic and make (a public rush to the pumps) a lot worse.”