Alabama pipeline explosion sends gas, diesel prices soaring: 6 things to know

An Alabama pipeline supplying about one-third of the gasoline, diesel and jet fuel used in the East Coast caught fire and exploded Monday after maintenance workers struck one of the lines with an excavating machine, reports The Wall Street Journal.

The explosion killed one person and injured several others. Colonial Pipeline Co. shut down its main gasoline and diesel pipelines Monday after the accident, which occurred in Shelby County, Ala. The diesel pipeline returned to normal operations Tuesday and the gasoline line is scheduled to restart on Saturday, the company said, although the temporary fuel shortage is already contributing to gas and diesel price hikes.

Here are six things to know.

  1. Colonial's 5,500-mile pipeline systems transports more than 100 million gallons of fuel a day from Houston to New Jersey, serving 13 states in the South and East Coast, WSJ reports.

  2. Monday's accident represents the second major pipeline disruption in two months. In September, areas of the Southeast experienced a spike in gas prices after Colonial had to close down part of its main gas line due to a leak that occurred just a few miles away from the site of Monday's explosion, according to the report.

  3. On Tuesday, gasoline futures spiked as much as 15 percent in intraday trading on the New York Mercantile Exchange, according to the report. These gains represented the biggest intraday move in eight years, although stock prices eventually fell and settled at 4.6 percent or $1.48 a gallon.

  4. Alabama Gov. Robert Bentley (R) declared a state of emergency Tuesday to waive limits on how many hours truckers can drive to transport gasoline to expedite the arrival of more fuel into the state, according to the report.

  5. Shipping rates for foreign tankers also jumped Tuesday after Colonial closed the pipeline. Rates for oil tankers transporting fuel from Europe rose 77 percent and rates from the Caribbean increased by half, according to the shipping brokerage firm McQuilling Partners.

  6. The total financial impact of the explosion is unclear, as high prices haven't filtered through to the pump, WSJ reports. Many fuel stations haven't had to refill pumps yet or they received fuel still being delivered from the pipeline.

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