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Major fuel pipeline shutdown may cause shortage in the US

Fears the shutdown of a major fuel pipeline would cause a gasoline shortage led to some panic buying and prompted US regulators on Tuesday to temporarily suspend clean fuel requirements in three eastern states and the nation’s capital.

A ransomware attack Friday on Colonial Pipeline forced the company to shut down its entire network, though industry experts say any shortages will be temporary.

The operator of the largest fuel conduit system in the United States, Colonial Pipeline ships gasoline and jet fuel from the Gulf Coast of Texas to the populous east coast through 5,500 miles (8,850 kilometers) of ducts that serve 50 million consumers.

The Environmental Protection Agency (EPA) on Tuesday announced a one-week suspension of clean air rules in an effort to ease supply issues.

The waiver is meant “to address the fuel supply emergency caused by a cyberattack on Colonial Pipeline’s computer networks that led to the pipeline’s shutdown,” EPA Administrator Michael Regan said in a letter to the governors of Maryland, Pennsylvania and Virginia and the mayor of Washington.

Regan said the EPA and Energy Department “have been actively monitoring the supply of fuel” and found that “the unusual pipeline shutdown has affected gasoline supplies.”

Colonial Pipeline said it hoped to have its system back online by the end of the week, but the shutdown raised fears the shortages would cause gasoline prices to spike just ahead of the US Memorial Day holiday, the unofficial kickoff to the summer travel season.

‘No reason’ to worry

The EPA move, effective through May 18, suspends clean air rules that require urban areas to use fuel with additives like MTBE, which makes gasoline less polluting but also more expensive.

The waiver “is necessary to take action to minimize or prevent disruption of an adequate supply of gasoline to consumers,” Regan said.

Oil industry analyst Patrick De Haan said on Twitter the national average gasoline price reached $2.97 a gallon, “matching the highest since 2018.”

While some gasoline stations along the east coast are running out of fuel, he cautioned against overreacting.

“Rack prices, or the prices stations pay for gasoline, rose only by a couple of cents today throughout the southeastern US. There is no pending spike coming to (gas prices) in the area, folks. No reason to freak out,” De Haan said.

Oil prices already had been on the rise as the global economic reopening accelerated, rebounding to just over $68 a barrel Tuesday from less than $22 in April 2020.

John Catsimatidis, CEO of United Refining Company which processes over 70,000 barrels per-day of oil and owns over 400 gas stations in the New York area, said on Monday that the pipeline shutdown will send prices higher, estimating an impact of “at least four cents a gallon.”

Meanwhile, Shell spokesman Curtis Smith said “It’s still too early to know about the potential impacts to product flow.”

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