Prepare for Rising Gas Prices: The Impact of the Keystone Oil Pipeline Shutdown

BISMARCK, N.D. (AP) — The Keystone oil pipeline, which runs nearly 2,700 miles, was shut down on Tuesday after a leak was detected in North Dakota. This closure halts the flow of millions of gallons of crude oil from Canada to U.S. refineries and may lead to higher gas prices.

South Bow, the pipeline’s managing company, acted quickly after a pressure drop was detected. The spill is currently contained to an agricultural area about 60 miles southwest of Fargo. The company stated that their main focus is ensuring safety for workers and minimizing environmental risks.

In 2024, the pipeline transported an average of 624,000 barrels, equating to over 26 million gallons, daily, according to Canadian regulators. The pipeline, stretching from Alberta to Texas, plays a critical role in supplying heavy crude oil.

With the pipeline shut down, experts warn that gas prices in the Midwest might spike. Ramanan Krishnamoorti, an energy expert at the University of Houston, highlighted that the impact could be swift. Prices might rise within days, especially affecting diesel and jet fuel. Heavy crude oil is crucial for refineries to produce these fuels efficiently; without it, there may be less diesel and jet fuel available, which could increase transportation costs and, potentially, grocery prices.

Patrick De Haan, a lead analyst at GasBuddy, reassured consumers that refineries usually have several days’ worth of crude oil on hand. However, if the shutdown persists beyond a week, it could create real supply challenges. Mark LaCour from the Oil and Gas Global Network also echoed this sentiment, noting that major refineries have substantial reserves, allowing them to continue operations for some time.

The pipeline was shut down alarmingly fast—within two minutes of an employee hearing a "mechanical bang" near Fort Ransom, where the spill was located. Investigators from the Pipeline and Hazardous Materials Safety Administration (PHMSA) are looking into the cause of the leak, but it remains unclear how much crude was released.

Interestingly, the Keystone pipeline is not new to this kind of trouble. Built in 2010 for $5.2 billion, it has a history of incidents, with 13 significant accidents documented over its 15 years of operation. This history raises questions about the safety measures in place for such crucial infrastructure.

Historically, the Keystone XL extension was proposed to transport more crude oil to the Gulf Coast but faced intense opposition and was ultimately abandoned in 2021. Environmental and Indigenous groups raised concerns about its potential impact on their lands and ecosystems.

In light of the recent incident, organizations like the Pipeline Safety Trust are voicing concerns about the effectiveness of regulatory bodies. The safety of the pipelines often depends on the resources these agencies have. Bill Caram, the executive director of the Pipeline Safety Trust, pointed out that underfunding impacts safety capabilities.

The Keystone pipeline’s troubled record highlights the balancing act between energy supply and safety. As we continue to navigate these challenges, the public remains watchful, eager for solutions that ensure both energy needs and environmental protection are met.

For more information on the Keystone pipeline’s history and current updates, visit Canadian EnergyRegulator.

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South Bow Corp., North Dakota, Construction and engineering, Keystone Pipeline, General news, ND State Wire, U.S. news, TC Energy Corp., Business, Bill Caram, Mark LaCour, Climate and environment, Bill Suess, Canada, Patrick De Haan, Oil spills, Donald Trump, Climate