ALABAMA – Colonial Pipeline, which fell victim to a ransomware attack Friday by computer hackers in Russia, is seeking to “substantially” restore service by the end of the week.
While the major U.S. pipeline uses a “phased approach” to go back online, experts say not to panic about potential gas shortages that might have been caused by the attack.
The 5,500-mile Colonial system which runs from Texas to New Jersey carries over 100 million gallons of gasoline, diesel, jet fuel and home heating oil to the East Coast from refineries along the Gulf Coast. It delivers about 45% of the fuel for the East Coast.
Fuel availability and rising prices could be on the horizon, but that depends on how long the pipeline stays shut down.
Here’s what we know about the Colonial Pipeline attack’s impact on Alabama:
How much of Alabama does the Colonial Pipeline reach?
The main line of the Colonial Pipeline system runs from Houston, Texas, to Linden, New Jersey. The main lines cross through Alabama at Birmingham.
Colonial Pipeline attack could impact fuel availability, gas prices
Gas prices and outages depend almost exclusively on how long the Colonial Pipeline remains shut down, analysts say.
“My instincts right now tell me this is a major event for the history of cybersecurity but not necessarily for fuel supply or fuel prices,” says Tom Kloza, analyst at the Oil Price Information Service. But he adds that if Colonial announces the main lines of their system are down for another three to four days, “it’ll get dicier.”
Kloza and Patrick DeHaan, head of petroleum analysis at GasBuddy, which tracks prices and outages, say the national average price of gas is unlikely to move more than a few cents.
As of Tuesday morning, the average national price of gas is $2.985, according to AAA. Monday’s average was $2.967. Last week’s average was $2.913.
In Alabama, the average price of gas is $2.723, up from Monday’s $2.683 and last week’s average of $2.640, according to AAA.
“Events like these are not necessarily big price movers,” DeHaan says. “This is more of a supply challenge.”
Why are gas prices rising?
Although the Colonial Pipeline hack is more of a supply challenge, it could have impacts on gas prices if it stays shut down.
Here are four reasons gas prices rise, not exclusively related to the Colonial Pipeline:
- Every spring, the EPA requires oil refineries to make an environmentally friendly gas blend, which is more expensive
- More traveling means more gas, which allows suppliers to charge more during high-demand periods, like holidays
- Hurricanes and storms can force oil rigs and refineries to go offline, which decreases the domestic supply
- Oil cartels limit their crude oil output when demand is low, which leads to less gas production but still maintains profit
The fifth reason why gas prices rise can be related to the Colonial Pipeline attack: Prolonged shutdowns of supply pipelines can cause shortages and price hikes.
Despite potential gas shortages, experts say ‘don’t panic’
The Colonial Pipeline Co. said it was working to restore service by the end of the week, but if it’s not fixed soon, some regions could start seeing outages, DeHaan said.
“Nobody is out yet, but we’re probably right on the cusp,” he adds. “Today, tomorrow, especially Wednesday, you’re going to see some outages.”
He urged drivers not to panic in states along the Gulf and southeastern Atlantic coasts..
Don’t “go out and hoard gasoline and make the problem much worse,” he says.
USDOT issues temporary hours of service exemption
Alabama is among the 17 states, plus Washington, D.C., that received a temporary hours of service exemption from the U.S. Department of Transportation on Sunday.
The exemption is part of the federal government’s efforts to assess the pipeline attack, the USDOT said Sunday.
The emergency declaration would provide regulatory relief for motor carriers and drivers that are providing direct assistance supporting emergency relief efforts transporting gas and fuel into the affected states.
