Gas stations along the U.S. East Coast are starting to run out of fuel as North America’s biggest petroleum pipeline fights to recover from a cyberattack that has paralyzed it for days.
From Virginia to Florida and Alabama, fuel stations are reporting that they’ve sold out of gasoline as supplies in the region dwindle and panic buying sets in. The White House said it was aware of shortages in the Southeast of the country and was trying to alleviate the problem.
Four days into the crisis, Colonial Pipeline Co. has only managed to manually operate a small segment of the pipeline—as a stopgap measure—and doesn’t expect to be able to substantially restore service before the weekend. The risk is that by that point drivers or airlines may already be suffering severe fuel shortages, while refineries on the Gulf coast could be forced to idle operations because they have nowhere to put their product.
U.S. average retail gasoline prices have risen to their highest since late 2014 due to the disruption, almost touching $3 per gallon. That could add to broader inflationary pressures as commodity prices from timber to copper also surge.
The Colonial pipeline is the most important conduit to distribute gasoline, diesel and jet-fuel in the U.S., moving the products from the refiners based on the Gulf coast into urban areas from Atlanta to New York and beyond. Each day, it ships about 2.5 million barrels—more than the entire oil consumption of Germany—connecting more than 20 refineries with about 200 distribution centers.
The vital conduit has been shut down since late Friday. Without the Colonial pipeline, many cities and airports must seek alternative supplies, either fuel imported by tanker or, if landlocked, relying on trucks.
On Monday, the Federal Bureau of Investigation pointed the finger at a ransomware gang known as DarkSide. While cyberattacks are increasingly used around the world as a weapon against geopolitical rivals, there was no indication that the current crisis could boil over internationally. President Joe Biden stopped short of blaming the Kremlin for the attack, despite some evidence that the hackers or the software they used are “in Russia.”
Russia has no connection to the cyberattack, Kremlin spokesman Dmitry Peskov told reporters on Tuesday.
Dwindling Supplies
Colonial Chief Executive Officer Joe Blount and a top lieutenant assured Deputy Energy Secretary David Turk and state-level officials that the company has complete operational control of the pipeline and won’t restart shipments until the ransomware has been neutralized.
Government officials haven’t advised Colonial on whether it ought to pay the ransom, Deputy National Security Adviser for Cyber and Emerging Technologies Anne Neuberger said during a briefing.
In the meantime, fuel supplies are dwindling just as the nation’s energy industry was gearing up to meet stronger fuel demand from summer travel. Americans are once again commuting to the office and booking flights after a year of Covid-19 restrictions. Citigroup Inc. said the East Coast is at risk of a “temporary, but major shortage” of fuels due to closure of Colonial.
In the first sign of the potential disruption to air travel, American Airlines Group Inc. said it was adjusting two long-haul routes that originate in Charlotte, North Caroline, to add fuel stops. Flights to Hawaii will call in at Dallas-Forth Worth airport, while London-bound aircraft will make a stop in Boston.
Airlines flying out of Philadelphia International Airport are burning through jet-fuel reserves and the airport has enough to last “a couple of weeks,’ a spokeswoman said.
The U.S. East Coast is losing around 1.2 million barrels a day of gasoline supply due to the disruption, according to a note from industry consultant FGE.
In Asheville, North Carolina, Aubrey Clements, a clerk at an Exxon Mobil Corp. station answered the phone with “Hello, I’m currently out of gas.” The Marathon gas station in Elizabethtown, North Carolina, had roughly two dozen cars waiting to fuel up, said an employee there.