Arizona Gas Pipeline

Topics: Supply and demand, Petroleum, Natural gas Pages: 3 (855 words) Published: October 12, 2010
Arizona Gas Pipeline

On July 30, 2003 an Arizona gas pipeline owned and operated by the Houston, Texas based company, Kinder Morgan Energy Partners, burst in Tucson and was shut down. A small portion of the 11-mile pipeline, which is about five feet underground burst and at least 10,000 gallons of gasoline spilled; the pipeline rupture spewed gasoline 50 feet into the air. The Arizona gas pipeline cuts through Tucson's South and West sides en route from El Paso, Texas to Phoenix, Arizona and the pipeline supplies Arizona with about 70 percent of its gasoline fuel. According to Garay, A. (August 2003), “Closure of the pipeline that provides a third of the metropolitan area's gas has sparked days of shortages and long lines at gas stations”.

Due to the gas pipeline being shut down in Tucson, Arizona created a shift in the demand curve which drove the price of fuel upward. Arizona has no gasoline refineries and must import all of its gasoline; Arizona’s demand for gasoline is supplied by Kinder Morgan Energy Partners – which supplies the state with two pipelines one is piped in through Southern California and the other line is piped from El Paso, Texas, that goes through Tucson into Phoenix. The pipeline was inspected and repaired by Kinder Morgan and was put back into service, but the shutdown of the pipeline while it was inspected and repaired set off a significant increase in gasoline prices within Tucson and Phoenix - Montes, E (October 2004) stated, “The closure forced many gas stations to close, led to long lines throughout the Phoenix metro area and sent prices skyrocketing”. Gas Pipeline 2

Incidentally, on July 9, 2003, the Phoenix Business Journal reported that Members of the Federal Energy Regulatory Commission (FERC) denied Arizona's request for a re-hearing to push back a Sept. 1 deadline to change the status of Arizona...
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