Oil prices rise on news of pipeline shutdown

Oil prices rose $1.24 to reach $89.27 today after the 800-mile trans-Alaska pipeline owned by BP and four other companies was shut down because of a leak. The pipeline, which carries between 630,000 barrels and 650,000 barrels a day, was shut down Saturday after a leak was reported at a North Slope pump station. The leak has been contained but there is no immediate timeframe for reopening the pipeline, according to Alyeska Pipeline Service Co., which manages the line. Refineries that rely on Alaska crude have several weeks of inventories available, so prices aren’t expected to top $100 a barrel because of the closure, according to The Schork Report, an energy consulting firm. Once a repair schedule has been released, oil prices could ease, says Cameron Hanover energy consultancy. Larry Wall, former spokesman for the Louisiana Mid-Continent Oil and Gas Association and a longtime industry observer, says he doesn’t expect the leak to raise local gas prices. The spike in price appears driven by speculation, not a lack of supply, and should level out if the leak is fixed soon, he says. Wall says the pipeline supplies the West Coast, and so the shutdown doesn’t affect Louisiana directly. —David Jacobs