Oil price surges after Midwest pipeline shuts down

[MNeagle]

Oil prices surged Friday after a pipeline that delivered oil to Midwest refineries was shut down, raising questions about how long the supply may be disrupted.

Benchmark oil for October delivery rose $2.20 to settle at $76.45 a barrel on the New York Mercantile Exchange.

Enbridge Energy Partners LP closed the pipeline Thursday afternoon after it began leaking in suburban Chicago. Spokeswoman Terri Larson said there is no time frame yet on when it will reopen.

She said the site is contained and crews hope to begin excavation around the pipe later Friday.

The pipe carried about 670,000 barrels per day from Superior, Wis., to Griffith, Ind.

Although oil and gasoline inventories are plentiful, traders are concerned that Midwest supplies could tighten if the pipeline stays closed for some time, analysts said. In turn, that could send retail gasoline prices up in the Midwest.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, speculated that Chicago-area motorists will see prices of $3 a gallon or higher. Much of that depends on how long the pipeline is shut down. A gallon of unleaded averages $2.86 in Chicago now, according to the Energy Information Administration.

In the aftermath of the BP oil spill in the Gulf of Mexico, Enbridge Energy officials likely will be "very, very deliberate" in making the repairs, Kloza said.

Enbridge Energy Partners is an affiliate of Enbridge Inc., headquartered in Calgary, Canada.

Oil prices also got an early boost from China trade figures, which showed an increase in crude imports, Tradition Energy analyst Addison Armstrong said.

The gains mirrored an increase in U.S. equities as investor concerns about slowing growth have been quieted at least partially by recent, more positive economic news.

At the pump, the national average for a gallon of unleaded regular gasoline was little changed at $2.685 a gallon, according to AAA, Wright Express and Oil Price Information Service. That's 0.4 cent higher than a week ago and 10.9 cents above a year ago.

In other Nymex trading in October contracts, heating oil rose 3.60 cents to settle at $2.1044 a gallon, gasoline added 3.77 cents to settle at $1.9731 a gallon. Natural gas gained 11.5 cents to settle at $3.883 per 1,000 cubic feet.

In London, Brent crude rose 69 cents to settle at $78.16 a barrel on the ICE Futures exchange.

http://finance.yahoo.com/news/Oil-price-surges-after-apf-2718020735.html?x=0

[MNeagle]

EPA says leak from oil pipeline near Chicago has stopped, cleanup could take weeks.

CHICAGO - Crews worked Monday to replace a 12-foot section of pipe at the site of an oil leak outside Chicago that led to a spike in regional gasoline prices, but it could take weeks to clean up the contamination, a U.S. Environmental Protection Agency official said.

A two-inch diameter hole was found in the bottom of the pipe, owned by the same company whose pipeline spewed oil into a southern Michigan waterway in July. Sam Borries, the EPA's on-scene coordinator, said the exact cause of the Illinois failure and the total volume of the spill were not yet known.

The leak was discovered Thursday in Romeoville along a 34-inch pipeline that runs 465 miles from Superior, Wis., to Griffith, Ind. The pipeline was five feet underground, but oil that was pushed to the surface reached a retention pond and the town's wastewater treatment plant, Borries said.

He said pipeline owner Enbridge Energy Partners has captured about 12,100 barrels of an oil and water mixture, and the continuing recovery could take weeks. The company also must excavate contaminated soil and test groundwater, Borries said.

An Enbridge spokeswoman did not immediately return a call from The Associated Press on Monday.

Borries said it was unclear how soon the pipeline could be returned to service, but the decision will be made by other investigating agencies, including the National Transportation Safety Board. A message was left Monday with an NTSB spokesman.

The pipeline closure disrupted the supply of crude oil to Midwestern refineries, and pushed prices higher prices at gas pumps in the region, said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service.

In Chicago, the average gas price jumped seven cents from Saturday to Sunday, according to AAA. Some stations increased their price for a gallon of regular from $3.05 on Friday to $3.29 on Sunday.

In Milwaukee, the average price Friday was $2.70, according to AAA, but some stations were selling a gallon for $2.89 or more Saturday. Cities across Indiana, Michigan and Ohio had similar increases during the weekend.

Kloza predicted gas prices would go up as much as 30 cents a gallon, depending on how long the pipeline is out of operation.
Enbridge also owns a pipeline that ruptured in Marshall, Mich., in July and leaked at least 800,000 gallons of oil into a waterway there. A congressional hearing is scheduled for Wednesday on that spill.

http://www.startribune.com/local/102777624.html?page=1&c=y



We saw the gas prices spike here over the weekend in MN.

[Sparky]

"Oil prices surge." For gawd's sake, they go up and down 2 bucks all the time. Where's the beef? Damn media.