Fuel prices still high; pipelines coming back online

| 9/2/2005

While diesel prices remained high on Friday, Sept. 2, some good news was trickling out of the oil and fuel producing areas of the Gulf Coast.

ProMiles reported a national average price for diesel of $2.895 per gallon on Friday, Sept. 2. That's up more than 20 cents from earlier in the week. Spot prices in some areas of the country, however, were approaching the $3.50 per gallon mark.

Prices for light, sweet crude oil fell in trading Friday on the New York Mercantile Exchange, dropping to $67.57 in midday trading after having surged beyond $70 per barrel earlier in the week.

Meanwhile, three of the major pipelines that move oil and refined fuel from the Gulf to other areas of the country have released damage estimates, and the news isn't all bad.

The Colonial Pipeline Company, which moves about 100 million gallons of fuel per day through its Colonial Pipeline running from Texas to Rhode Island, is operating at about 66 percent of normal capacity and company officials expect that number to climb to 85 percent by the end of the Labor Day weekend.

Shell Oil Co. officials said its Capline crude oil pipeline, which moves crude oil from the Gulf to refineries in Illinois and the Midwest, is operating at about 75 percent capacity. Furthermore, they said the company will resume full operations once electricity is restored to pumping stations in Mississippi. However, it could be weeks before that happens.

A third major pipeline, Plantation Pipeline, remains shut down. CNN reported that a spokesman for the pipeline, which pumps about 26 million gallons of fuel each day, said the pipeline is not damaged, but there is no electricity to run the pumping stations in Collins, MS.

Oil companies have also begun damage assessments to their operations in the Gulf of Mexico.

The American Petroleum Institute said there are an estimated 58 oil rigs in the Gulf that were damaged by Katrina, though the full extent of damage to each is not yet known. The API said it would still be several days before full damage can be assessed.

The Department of Energy has already released a total of 8.5 million barrels of oil from the Strategic Petroleum Reserve and is also planning to make an additional 30 million barrels available for sale.

In addition, Secretary of Energy Samuel Bodman announced Friday, Sept. 2, that the U.S. would also receive both oil and refined fuel products from international petroleum reserves.

Bodman said the International Energy Agency, a Paris-based group that advises 26 governments from the European Union and elsewhere, will release 60 million barrels of oil and refined fuel to the U.S. Those barrels will be released at a rate of 2 million barrels per day over the next month.