Despite reports of gasoline shortages scattered throughout the Southeast on Tuesday morning because of a cybertattack involving Colonial Pipeline, industry analysts and experts are warning against panic buying and hoarding of gasoline.
“Panic buying or hoarding of gasoline will prolong outages and price spikes, making them much worse,” said Patrick De Haan, head of petroleum analysis at Gas Buddy. “It is true that if the pipeline remains out of service into the early part of next week, roughly Tuesday or so, that some gas stations may run low on gasoline. Tank farms that take the gasoline from the pipeline are likely starting to see supply run low, so it is vital that motorists do not overwhelm the system by filling their tanks.”
De Haan and his company are urging motorists to only buy what gasoline they immediately need for their cars and avoid filling their tanks until Colonial Pipeline resumes full operation.
Gas shortages were being reported early Tuesday throughout the Southeast after Colonial Pipeline was hit by a cyberattack. The major U.S. fuel pipeline said it hopes to have services mostly restored by the end of the week as the FBI and administration officials identified the culprits as a gang of criminal hackers.
Colonial Pipeline, which delivers about 45% of the fuel used along the Eastern Seaboard, shut down Friday after a ransomware attack by a gang of criminal hackers that calls itself DarkSide. Depending on how long the shutdown lasts, the incident could impact millions of consumers.
Colonial Pipeline halted all pipeline operations over the weekend, forcing what the company called a precautionary shutdown. U.S. officials said Monday the “ransomware” malware used in the attack didn’t spread to the critical systems that control the pipeline’s operation. But the mere fact that it could have done so alarmed outside security experts.
Whether there will be more widespread gasoline shortages depends on how long the shutdown lasts.
There’s no imminent shortfall, and thus no need to panic buy gasoline, said Richard Joswick, head of global oil analytics at S&P Global Platts. If the pipeline is restored by Friday, there won’t be much of an issue.
“If it does drag on for two weeks, it’s a problem,” Joswick added. “You’d wind up with price spikes and probably some service stations getting low on supply. And panic buying just makes it worse.”
The average gasoline price jumped 6 cents to $2.96 over the past week, and it’s expected to continue climbing because of the pipeline closure, according to AAA. Mississippi, Tennessee and the East Coast from Georgia to Delaware are the most likely to experience limited fuel availability and higher prices, and if the national average rises by 3 more cents, these would be the highest prices since November 2014, according to AAA.
“The longer the problem continues, the more it will likely affect motorists in Georgia, Tennessee, South Carolina, North Carolina, Virginia, Mississippi and Alabama, and to a lesser extent, Northern Florida,” De Haan said. “These are all markets served by the Colonial Pipeline, one of the nation’s most critical pipelines for refined oil products.
“Once the pipeline restarts, it will take days for normal conditions to occur,” he said. “If motorists hoard gasoline, the problem may stretch for several weeks with continued outages and further pricing impacts. It’s very difficult to pin the exact amount prices may rise, but for now, it appears to be a few cents per gallon, possibly growing more significant if the pipeline remains shut down for more than two to three more days.”
“We’re living in the age of the pandemic, but there’s no reason people should be hoarding gasoline the way they did with toilet paper,” said Ramnath Chellappa of Emory’s Goizueta Business School. “Just normal behavior is best at this time. Sure, there has been an increase in gas prices, but the market also reacts to incidents like this.”
Chellappa does warn that conditions could change the longer Colonial’s shutdown goes on.
“We don’t know if Colonial has paid the ransom and we don’t know how they’re going to resolve it,” he says. “If they’re back online by Friday as they predict, we’ll be OK. The only gas shortages we’re seeing right now are in more rural areas, not in urban or suburban areas. If the shortages extend beyond a week or so, the situation could get worse.”
