Search Here

The Keystone oil pipeline, an important transportation route for crude oil from Canada to US refineries, was shut down early Tuesday following a rupture in North Dakota.

This sudden disruption is expected to affect fuel supplies, particularly gasoline and diesel, across the Midwest and could drive up prices quickly.

The rupture, detected by South Bow, a Calgary-based pipeline company, caused an estimated 3,500 barrels of oil to spill. The leak was confined to a rural agricultural field located about 60 miles southwest of Fargo.

Company officials acted swiftly, isolating the affected pipeline section and mobilizing containment efforts. While the spill did not impact any people or structures, emergency personnel took necessary precautions to block off a nearby seasonal stream.

"The affected segment has been isolated, and operations and containment resources have been mobilized to site," South Bow stated. "Our primary focus right now is the safety of onsite personnel and mitigating risk to the environment."

According to AP, the shutdown of the nearly 2,700-mile Keystone pipeline could lead to significant fuel price increases in the coming days.

Diesel and Jet Fuel Prices Set to Soar Following Keystone Pipeline Shutdown

Ramanan Krishnamoorti, Vice President for Energy and Innovation at the University of Houston, highlighted concerns that gasoline prices in the Midwest could rise in the coming days due to the pipeline disruption.

However, the impact is expected to be more severe for diesel and jet fuel, as the pipeline transports a large amount of heavy crude oil essential for producing these fuels.

"The refineries run on blends of crude, and not having access to heavy crude will affect their ability to produce diesel and jet fuel," Krishnamoorti explained. "When supply is limited, they'll make less of both products."

Diesel price hikes could further affect the economy by increasing transportation costs, which in turn may lead to higher grocery prices.

Patrick De Haan, lead petroleum analyst at GasBuddy, stated that while major refineries generally maintain a few days' worth of oil reserves, any extended downtime of the pipeline will exacerbate the supply disruption, Newsweek said.

The Keystone pipeline has faced several incidents since its construction in 2010, with this latest rupture adding to its troubled history.

The pipeline, which stretches from Alberta, Canada, to Texas, has had multiple spills over the years, including a major one in 2022 in Kansas.

Although the proposed Keystone XL extension project was abandoned in 2021 due to environmental concerns, the current pipeline still plays a critical role in transporting oil to US refineries.

South Bow's quick response to the leak has limited immediate environmental damage, but the long-term effects on fuel prices remain uncertain.

If the pipeline remains shut for an extended period, refineries may struggle to maintain their production rates, ultimately leading to higher fuel prices for consumers.