North America’s biggest petroleum pipeline may take several more days to recover from a cyberattack that forced it to halt shipments of gasoline and other fuels, raising the specter for shortages if local reserves run out. Colonial Pipeline said segments of its Texas-to-New Jersey line are being brought back online in steps, easing some of the most immediate concerns that pumps in major population centers up and down the U.S. East Coast could run dry. The question now is whether regional inventories held in storage tanks are enough to satisfy demand while Colonial works on resuming operations.
The conduit has been shut down since late Friday, prompting frenzied moves by traders and retailers to secure alternative supplies. On Monday, the Federal Bureau of Investigation pointed the finger at a ransomware gang known as DarkSide. The pipeline hasn’t suffered any physical damage and no fuel shortages have been detected, a White House official said. President Joe Biden said there’s no apparent signs that Russia played any role in the hack.
Emergency shipments of gasoline and diesel from Texas already are on the way to Atlanta and other southeast cities via trucks, and at least one Gulf Coast refinery began trimming output amid expectations that supplies will begin backing up in the nation’s oil-refining nexus. Airlines flying out of Philadelphia International Airport are burning through jet-fuel reserves and will need to locate new supplies “soon,” a spokeswoman said.
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. The national average retail gasoline price rose to $2.967 a gallon on Monday, a 2.4% increase from Friday, according to AAA. The premium for wholesale gasoline in the New York area expanded to its widest in three months.
The attack came just as the nation’s energy industry was preparing to meet stronger fuel demand from summer travel. Americans are once again commuting to the office and booking flights after a year in lockdown. Depending on the duration of the disruption, retail prices could spike, further stoking fears of inflation as commodity prices rally worldwide. DarkSide said in a post on the dark web that it wasn’t to blame and hinted that an affiliate group may have been behind the attack. The group promised to do a better job of screening customers that buy its malware.
Gasoline futures that initially surged as much as 4.2% in overnight trading surrendered most of those gains on Monday. Convenience-store chains in places like Atlanta and Savannah, Georgia, began clamoring for emergency fuel deliveries on Friday afternoon, said Steve Boyd, senior managing director at Houston-based distributor Sun Coast Resources Inc.
Landlocked cities face the greates danger of fuel shortages compared with those with access to water-borne deliveries, Boyd said. If the pipeline remains down for many more days, he’s anticipating a “massive surge” in orders. Sun Coast, which operates about 900 trucks, has delivered emergency supplies during 75 major storms over the past 15 years, including during hurricanes Harvey and Irma in 2017.
Although the attack on the Colonial system is “unprecedented,” the conduit ought to be back in service in three to five days, Amrita Sen, co-founder of consultant Energy Aspects Ltd., told Bloomberg TV just hours before the pipeline company announced it’s end-of-week target.
Some tankers are also being secured to temporarily store gasoline along the Gulf Coast, according to market participants who asked not to be identified because the information isn’t public. Meanwhile, Total SE scaled back activity in a key unit at its Port Arthur, Texas, refinery because of the Colonial shutown, according to a person familiar with operations.