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U.S. fuel supplies tighten as pipeline outage drags on

Supplies of gasoline tightened further in parts of the United States on Tuesday as the nation’s biggest fuel pipeline was shut down for a fifth day after an attack by hackers, raising concerns about price spikes ahead of the Memorial Day holiday.

Colonial Pipeline said it was working toward a substantial restart of operations by the end of this week after a cyberattack forced it to cease operations on Friday, choking off nearly half of the East Coast’s fuel supply and underscoring the vulnerability of U.S. energy infrastructure to hackers.

Colonial’s website was down early on Tuesday, which the Alpharetta, Georgia-based company said was a “temporary service disruption” unrelated to the ransomware.

The FBI has accused a shadowy criminal gang called DarkSide of the ransomware attack. DarkSide is believed to be based in Russia or Eastern Europe and avoids targeting computers that use languages from former Soviet republics, cyber experts say.

Russia’s embassy in the United States on Tuesday rejected speculation that Moscow was responsible for the attack.

President Joe Biden on Monday said there was no evidence so far that Russia’s government was involved, but said there was evidence that the culprits’ ransomware was in Russia.

Ransomware is a type of malware designed to lock computers by encrypting data and demanding payment to regain access.

A statement issued in DarkSide’s name on Monday said: “Our goal is to make money, and not creating problems for society.”

It is unknown how much money the hackers are seeking, and Colonial has not commented on whether it would pay.

The top U.S. energy regulator issued a call on Monday for mandatory cybersecurity standards for pipeline operators. “Encouraging pipelines to voluntarily adopt best practices is an inadequate response,” said Richard Glick, the chairman of the Federal Energy Regulatory Commission.


Fuel supply disruption has driven gasoline prices at the pump to multi-year highs and demand has spiked in some areas served by the pipeline as motorists fill their tanks.

Some experts, however, think the outage will have only a short-term economic impact on the United States, similar to a hurricane-related disruption.

“Markets will go crazy, but two weeks later no one knows it happened,” said Chuck Watson, director of research at ENKI, which studies the economic effects of natural and other disasters.

National average pump prices are approaching their highest levels since May 2014, the American Automobile Association said. The association warned against hoarding, saying it thins supplies further.

North Carolina, the Environmental Protection Agency and U.S. Department of Transportation issued waivers to combat potential gasoline shortages. The EPA issued a waiver on Tuesday that allows distributors to continue supplying winter fuel blends through May 18 in three Mid-Atlantic states. North Carolina and the DOT relaxed fuel-driver rules.

On Monday, U.S. gasoline demand rose nearly 20% from a week ago, according to fuel sales tracker GasBuddy. In Virginia, 7.5% of the 3,800 stations tracked by GasBuddy were without fuel on Tuesday.

“I know some friends who decided not to go out of town this weekend to save gas,” Caroline Richardson said as she refueled at a gas station in Sumter, South Carolina. Richardson paid 15 cents more per gallon than a week ago.

There are growing concerns that the outage could lead to further price spikes ahead of the Memorial Day weekend at the end of this month. The weekend is the traditional start of the busy summer driving season.

If the disruption stretches on, fuel suppliers could ship by trucks and rail instead to make up for some of the shortfalls. The Department of Transportation on Sunday lifted driver restrictions on fuel haulers in 17 states affected by the shutdown.

Several Gulf Coast refiners that rely on Colonial’s pipeline for shipments have cut processing. Total SE and Motiva Enterprises trimmed gasoline production at their Port Arthur, Texas refineries and Citgo Petroleum pared back at its Lake Charles, Louisiana, plant, sources told Reuters.
Source: Reuters (Reporting by Laura Sanicola, Stephanie Kelly and Devika Krishna Kumar; Editing by Richard Valdmanis, Peter Cooney, Barbara Lewis and Paul Simao)

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