(This guest post originally appeared on The Oil Drum and is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License)

In the past several weeks, we have seen many reports such as this:

Colonial Pipeline Limits Gasoline Supply Shipments for Cycle 70

Colonial Pipeline Co., which operates the largest pipeline linking U.S. Gulf Coast refiners and East Coast markets, will limit shipments of gasoline because orders exceed the company’s ability to deliver fuel on time.

The Alpharetta, Georgia-based company issued the requirement, known as an allocation, in a bulletin to shippers for the 70th cycle. The restriction applies to shipments on Colonial pipelines north of Collins, Mississippi.

Companies will be able to ship a pro-rated portion of their original nomination, based on their shipping history over the past year, according to Colonial.

With the assistance of Jane Van Ryan at API, I contacted to Steve Baker at Colonial Pipeline, to find out what is happening. I discovered the oversubscription seems to be related to refinery shutdowns in the Northeast.

Many of you will remember that Colonial Pipeline is the big pipeline that carries finished oil products from the Gulf Coast up to the Northeast part of the United States.



Map showing route of Colonial Pipeline

I live in the Atlanta area, so I remember when there have been gasoline disruptions because of inadequate supply. This has happened twice: once following Hurricane Katrina in 2005, and again in September 2008, following two gulf hurricanes.

When I inquired, I found out that there are really two parallel pipelines. One carries only gasoline products; the other carries distillate products. The line that is running short of capacity is the gasoline pipeline. (If only one is running short of capacity, it is not too surprising that it is the gasoline line. Distillate products like diesel fuel are now in very abundant supply; gasoline is at closer to normal levels.)

When I asked why demand was so high for gasoline pipeline capacity, one of the reasons mentioned was that shutdowns in refinery capacity in the