Regan Brown
The shutdown of oil and fuel pipelines can have a significant impact on fuel prices and supply, particularly diesel fuel. In 2021, a ransomware attack forced the shutdown of the largest fuel pipeline in the US, the Colonial Pipeline, which transports nearly half of the East Coast's fuel supply, including diesel. The shutdown caused concerns about spot shortages of diesel and price increases. Similarly, the Keystone XL pipeline's cancellation in 2021 and the subsequent shutdown of the Keystone Pipeline in 2025 raised concerns about higher diesel prices due to reduced supply of heavy crude oil used in diesel production. While some claim that the Keystone XL cancellation affected fuel prices, others argue that it had a negligible impact as the pipeline was never operational.
| Characteristics | Values |
|---|---|
| Date of shutdown | April 2025 |
| Cause of shutdown | A rupture |
| Affected area | Fort Ransom, North Dakota |
| Volume of spill | 1.1 million gallons |
| Volume transported daily | 624,000 barrels or 26 million gallons |
| Fuel types affected | Gasoline, diesel, and jet fuel |
| Impact on diesel | Potential price increases and reduced availability |
| Impact on jet fuel | Potential price increases and reduced availability |
| Impact on gasoline | Potential price increases and spot shortages |
| Political context | President Biden's cancellation of Keystone XL in 2021 |
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What You'll Learn
The Keystone XL pipeline was not operational when shut down
The Keystone XL pipeline was a proposed extension to the Keystone Pipeline, which was constructed in 2010 and carries crude oil across several states to refineries in the US. The Keystone XL pipeline was proposed to transport oil from Alberta's oil sands to Texas, but it faced fierce opposition from environmentalists, Indigenous communities, and civil rights groups. The project was delayed multiple times due to environmental concerns and permit issues.
In 2021, President Joe Biden revoked the permit for the Keystone XL pipeline, and the company, TC Energy, ultimately abandoned the project. The pipeline was not operational when it was shut down and was not expected to be running until 2023. According to experts, the cancellation of the Keystone XL pipeline did not impact the oil market or gas prices.
The Keystone XL pipeline's cancellation has been falsely associated with high gas prices on social media. However, experts attribute high gas prices to other factors such as the global spike in crude oil costs and increased demand after pandemic lockdowns. The Keystone Pipeline system, which includes the operational Phase I, Phase II, and Phase III, continues to transport crude oil to refineries.
The Keystone XL pipeline's potential impact on diesel fuel is important to consider. Diesel trucks transport groceries, and higher diesel costs could lead to increased grocery prices. However, the pipeline's cancellation did not directly affect diesel fuel availability or prices. The Keystone Pipeline system continues to transport crude oil used for refining diesel fuel, and refineries typically have enough crude oil supply to prevent immediate impacts on diesel fuel production.
In conclusion, the Keystone XL pipeline was not operational when it was shut down, and its cancellation did not directly affect diesel fuel supplies or prices. The Keystone Pipeline system continues to transport crude oil, and refineries have sufficient supplies to maintain diesel fuel production in the short term. While the Keystone XL pipeline may have had indirect effects on the energy market and future diesel fuel availability, its cancellation did not directly impact the availability or pricing of diesel fuel.
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The pipeline's shutdown could lead to higher diesel costs
The shutdown of the Keystone Pipeline in 2025 due to a rupture could lead to higher diesel costs. The pipeline transported an average of 624,000 barrels, or more than 26 million gallons, per day in 2024, according to Canadian regulators. It stretches 2,689 miles from Alberta, Canada, to Texas and plays a crucial role in supplying heavy crude oil to refineries.
The loss of this supply will impact the refineries' ability to produce diesel fuel. Ramanan Krishnamoorti, vice president for energy and innovation at the University of Houston, stated that the shutdown could quickly lead to higher gasoline prices, particularly for diesel and jet fuel. The refineries rely on blends of crude oil to produce specific products, and the heavy crude supplied by the Keystone Pipeline is essential for diesel and jet fuel production.
Higher diesel costs will have a ripple effect on the economy. Diesel fuel is widely used in transportation, especially for trucks that deliver goods, including groceries. As a result, diesel price increases can lead to higher transportation costs and, ultimately, higher prices for consumer goods. This effect was highlighted by Patrick De Haan, the lead petroleum analyst at GasBuddy, who warned that higher diesel costs could lead to grocery price increases.
While refineries typically have a few days' supply of crude oil on hand, a prolonged shutdown could exacerbate the situation. Mark LaCour, editor-in-chief of the Oil and Gas Global Network, noted that while gas prices may not immediately increase, a more extended outage could lead to problems. This was evident in the case of the Colonial Pipeline shutdown in 2021 due to a ransomware attack, which caused concerns about spot shortages of diesel and a potential spike in gasoline prices.
In summary, the shutdown of the Keystone Pipeline could lead to higher diesel costs, impacting transportation and consumer goods. The availability of alternative sources of crude oil and the duration of the shutdown will be crucial factors in mitigating the potential effects on diesel prices and the broader economy.
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The US still receives oil from Canada through other means
The Keystone XL pipeline was shut down by President Biden on his first day in office, which eliminated 11,000 American jobs. The pipeline was never operational when it was shut down and was not expected to be running until 2023. The Keystone pipeline, on the other hand, was constructed in 2010 and has been operational since. The shutdown of the Keystone pipeline could lead to higher gas prices at the pump, particularly for diesel and jet fuel. This is because the pipeline transports a large amount of heavy crude oil, which is required to refine diesel and jet fuel.
Despite the shutdown of the Keystone XL pipeline, the US still receives oil from Canada through other means. Ramanan Krishnamoorti, a professor and chief energy officer at the University of Houston, stated that the US receives oil from Canada through railways and other operational oil pipelines. The Keystone pipeline itself was one of several pipelines transporting oil from Canada to the US. In addition to the original Keystone pipeline, the Trans Mountain pipeline expansion (TMX) has also increased the volume of crude oil transported to the coast of British Columbia for export to Pacific Ocean buyers. The US West Coast imported 498,000 barrels of crude oil per day in July 2024, a record high for the region.
In 2023, Canada was one of the top five source countries for US gross petroleum imports, accounting for about 4.06 million barrels per day of crude oil exports. This made the United States a net petroleum exporter of 1.64 million barrels per day in 2023. While the shutdown of the Keystone XL pipeline may have contributed to higher gas prices, it is important to consider other factors such as the global spike in crude oil prices and increased demand after the pandemic lockdowns.
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The Keystone pipeline transported a large amount of heavy crude
The Keystone Pipeline, constructed in 2010, transported crude oil from Canada to refineries in the US. The pipeline was managed by South Bow and stretched 2,689 miles (4,327 kilometres) from Alberta, Canada, to Texas. The Keystone XL pipeline, an expansion of the Keystone Pipeline System, was proposed in 2008 and became a symbol of the ongoing dispute between environmentalists and fossil fuel proponents. Environmentalists argued that the pipeline posed a significant risk to the environment, while fossil fuel proponents emphasised the economic and political benefits of the project.
The Keystone XL pipeline was designed to transport tar sands oil, a type of synthetic crude oil made by separating bitumen from oil sands. Tar sands oil is considered the "dirtiest" fossil fuel on the planet, producing three to four times the carbon pollution of conventional crude extraction. The pipeline would have carried 830,000 barrels of this oil per day to refineries on the Gulf Coast of Texas. However, it is unclear how much of this oil would have been exported versus consumed domestically.
The Keystone XL pipeline project faced substantial resistance from various groups, including environmental activists, the scientific community, and Native American tribes. The pipeline would have infringed on the rights of Indigenous people and posed a risk to their water sources. In 2021, following years of protests and legal battles, President Joe Biden denied a key permit for the Keystone XL pipeline, effectively cancelling the project. The cancellation of the Keystone XL pipeline did not significantly impact gas prices, as it was never operational and was not expected to be running until 2023.
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The pipeline's shutdown could lead to grocery price increases
The Keystone Pipeline, a nearly 2,700-mile pipeline constructed in 2010, was shut down after it ruptured in North Dakota. This halted the flow of millions of gallons of crude oil from Canada to refineries in the US. The pipeline transported an average of 624,000 barrels or more than 26 million gallons per day in 2024.
The shutdown could lead to higher gasoline prices in the Midwest within one or two days, according to Ramanan Krishnamoorti, vice president for energy and innovation at the University of Houston. However, the impact on diesel and jet fuel is expected to be greater. The Keystone pipeline transports a unique, heavy crude that is only available from limited sources. Refineries rely on blends of crude to produce various products, including gasoline, diesel, and jet fuel. With a reduced supply of heavy crude, their ability to produce diesel and jet fuel will be affected, resulting in decreased production.
Higher diesel costs could lead to increases in grocery prices since diesel trucks are used to transport these products. While refineries typically have a few days' supply of crude oil on hand, a prolonged shutdown of more than a week could lead to problems. Mark LaCour, editor-in-chief of the Oil and Gas Global Network, noted that the major refineries served by the Keystone pipeline have millions of barrels in storage, and even a complete cutoff of the pipeline for 2 to 3 weeks would not significantly impact their ability to continue refining gasoline.
It is important to note that the Keystone XL pipeline, a proposed extension to the original Keystone pipeline, was never operational and was canceled in 2021 due to environmental concerns. Experts have stated that the cancellation of the Keystone XL pipeline is not responsible for the current high gas prices, which are influenced by other factors such as the global spike in crude oil costs and increased demand after pandemic lockdowns.
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Frequently asked questions
Yes, diesel fuel can be affected by pipeline shutdowns. For example, the shutdown of the Keystone Pipeline, which transports heavy crude, could have a greater impact on diesel and jet fuel. Similarly, the shutdown of the Colonial Pipeline, the largest fuel pipeline in the U.S., due to a ransomware attack, led to concerns about spot shortages of diesel fuel.
The Keystone Pipeline was shut down due to a rupture, with an employee hearing a "mechanical bang." The cause was likely an underground pipeline rupture, which led to oil spilling into a field.
The shutdown of the Keystone Pipeline could lead to higher diesel fuel prices and affect the ability to produce diesel fuel. The pipeline transported an average of 624,000 barrels or 26 million gallons per day, and its shutdown could quickly raise diesel fuel prices.
Diesel fuel shortages can occur rapidly, within one to two days of a pipeline shutdown. However, refineries typically have a few days' supply of crude oil on hand, which can prevent immediate impacts. If the shutdown persists beyond a few days or a week, it can become more problematic.
