Gas prices rise, demand spikes after pipeline hack

Wednesday, May 12, 2021
Gas prices rise, demand spikes after pipeline hack
The national price at the pump ticked up to $2.985 on Tuesday, the highest level in nearly six years, according to AAA.

NEW YORK -- A growing number of gas stations along the East Coast are without fuel as nervous drivers aggressively fill up their tanks following a ransomware attack that shut down the Colonial Pipeline, a critical artery for gasoline. The panic-buying threatens to exacerbate the supply shock.

As of 4 pm ET Tuesday, 8.5% of gas stations in North Carolina and 7.7% in Virginia didn't have gasoline, according to outage figures reported by GasBuddy, an app that tracks fuel prices and demand. The Virginia figure was flat from 11 am ET, while North Carolina was up from 5.8% previously.

Rising outages are also being reported at gas stations in Georgia (5.8%), Florida (2.8%) and South Carolina (3.5%), according to GasBuddy, which collects user reports and shares the information with the government during emergencies.

"Panicked buying" is "running stations in the region dry," Patrick De Haan, head of petroleum analysis at GasBuddy, told CNN Business.

He warned that the "irrational behavior" could prolong supply issues "for weeks."

RELATED | Colonial Pipeline officials hope most service will be back by weekend after ransomware hack

Tiffany Wright of AAA Carolinas criticized what she described as "irresponsible behavior at the pump."

"People are taking their entire family fleet of vehicles to the gas station and filing up when they don't need to," Wright told CNN's Dianne Gallagher. "We are our own worst enemy in this situation because we are over-consuming at the pump."

Energy Secretary Jennifer Granholm pleaded with Americans not to hoard gas as the pipeline attempts to resume operations.

"Let me emphasize that much as there was no cause for say, hoarding toilet paper at the beginning of the pandemic, there should be no cause for hoarding gasoline," Granholm said during Tuesday's White House press briefing, "especially in light of the fact that the pipeline should be substantially operational by the end of this week and over the weekend."

Demand for information on gasoline availability is so intense that GasBuddy itself experienced outages. De Haan told CNN the platform is experiencing "slowdowns" because of "extreme traffic," so users may experience "periodic timeouts" on its website and app.

Gas prices flirt with $3 a gallon

US gasoline demand jumped 20% on Monday compared with the prior week, according to GasBuddy.

In just five states served by Colonial Pipeline - Georgia, Florida, South Carolina, North Carolina and Virginia -- demand was up by a collective 40.1%, GasBuddy said.

"I got scared that I could not go to work or take my daughters to school," Florida resident Linderly Bedoya told CNN on Tuesday. "All the gas stations in my area were without gas and when I finally found one I had to stay an hour in line and I had to fill up with the premium unleaded."

Bedoya posted a photo on Twitter of a sign from a gas station in Tallahassee that warns drivers only premium fuel is available.

GasBuddy lists smaller outages, impacting less than 1% of the gas stations, in Alabama and Tennessee.

The national price at the pump ticked up to $2.985 on Tuesday, the highest level in nearly six years, according to AAA.

"This shutdown will have implications on both gasoline supply and prices, but the impact will vary regionally. Areas including Mississippi, Tennessee and the east coast from Georgia into Delaware are most likely to experience limited fuel availability and price increases, as early as this week," said Jeanette McGee, AAA spokesperson. "These states may see prices increase three to seven cents this week."

Investors are taking the supply shock in stride. RBOB gasoline futures are little changed from Friday.

Emergency steps to ease supply concerns

Virginia Governor Ralph Northam issued a state of emergency declaration Tuesday afternoon "to prepare and coordinate our response" to the Colonial Pipeline shutdown. Northam said that while gasoline reserves in Virginia are "sufficient to address immediate supply concerns, he acknowledged that a prolonged pipeline closure will cause "gasoline supply disruptions to various retailers."

In Georgia, Governor Brian Kemp signed an executive order suspending the state's gas tax to help drivers cope with higher prices caused by the Colonial Pipeline hack. Kemp's order also allows for increased weight limits for trucks transporting fuel and prohibits price gouging.

Meanwhile, North Carolina Governor Roy Cooper declared a state of emergency Monday evening, a move that allowed him to temporarily suspend some fuel regulations in a bid to ensure adequate supply.

The Environmental Protection Agency on Tuesday issued an emergency fuel waiver aimed at easing fuel shortages caused by the Colonial Pipeline shutdown.

EPA Administrator Michael Regan cited "extreme and unusual fuel supply circumstances" for waiving certain federal requirements for fuels sold in the District of Columbia, Maryland, Pennsylvania and Virginia. The waiver will continue through May 18.

The Colonial Pipeline, which supplies nearly half the diesel and gasoline to the East Coast, said Monday it hopes to be substantially operational by the end of the week after a hack that authorities believe was carried out by a criminal group called DarkSide.

"This is a hugely important part of our energy infrastructure on the East Coast," Neil Chatterjee, a commissioner at the Federal Energy Regulatory Commission, told CNN Business on Monday. "These pipelines are now, in many ways, on the front lines of our national defense."

Alabama Governor Kay Ivey urged residents not to panic and "only fill up if you need to, and do not fill up multiple containers."

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