Gas Shortages Could Last Past the Restart of the Colonial Pipeline

Photo credit: Autoweek
Photo credit: Autoweek
  • Ransomware hack of Colonial Pipeline, spanning from Texas to New Jersey, had caused the pipeline to shut down last weekend.

  • Pipeline operations are returning to normal in the second half of this week, but it could be a while before the shortages dissipate.

  • Shortages at gas stations are said to be linked to a lack of timely restocking by tankers at the local level, sparked by surge in demand, rather than pipeline or storage operations.

The regional gasoline shortage affecting the southern half of the east coast of the United States, sparked by panic buying following a ransomware hack of the Colonial Pipeline and its shutdown last week, might not dissipate for some time, even as the pipeline returns to normal in the coming days. The pipeline itself returned to slower-than-normal operations starting Wednesday afternoon, the company said, but the supply chain is likely to be affected until this weekend. The pipeline supplies just under 50% of all fuel types on the east coast.

However, it's the shortages at the retail level that appear to be causing long lines at the pumps.

"Following this restart, it will take several days for the product delivery supply chain to return to normal," the pipeline operator said on Wednesday, May 12. "Some markets served by Colonial Pipeline may experience, or continue to experience, intermittent service interruptions during the start-up period. Colonial will move as much gasoline, diesel, and jet fuel as is safely possible and will continue to do so until markets return to normal."

Photo credit: Colonial Pipeline
Photo credit: Colonial Pipeline

The pipeline's shutdown sparked panic buying in some states in the southeast, and occurred May 7, with a hacker group demanding millions of dollars in bitcoin from the company. The FBI is investigating the cybercrime, but in the short term it had caused a halt to transporting fuel supplies originating from Houston, Texas, that travel up the eastern half of the U.S. to an end point in New Jersey. The pipeline supplies much of the fuel that gas stations sell in several states on the east coast.

"Colonial Pipeline has made substantial progress in safely restarting our pipeline system and can report that product delivery has commenced in a majority of the markets we service," the company said on Thursday morning, May 13. "By mid-day today, we project that each market we service will be receiving product from our system. The green segments on this map are operational, meaning product delivery has commenced. Blue lines will be operational later today."

"This would not have been possible without the commitment and dedication of the many Colonial team members across the pipeline who worked safely and tirelessly through the night to get our lines up and running," the company added. "We are grateful for their dedicated service and professionalism during these extraordinary times."

Even though the pipeline did affect the supply of gasoline and diesel fuel available at gas stations, news of the hack and the resulting shutdown had prompted some drivers to buy excess amounts of gasoline, filling up gas cans (as well as unapproved and unsafe containers) at gas stations.

Transportation Secretary Pete Buttigieg indicated earlier this week that shortages at gas stations were caused mostly by panic-buying rather than the pipeline's actual shutdown, as it takes several days for the effect to trickle down to individual stations via tankers.

"We didn't hear anything about it, but I just saw a lot of people with pickup trucks filling up cans at gas stations, but I thought it was just the summer mowing season starting," one Atlanta-area driver told Autoweek. "It was only when I saw something on the news about it on Monday that I found out what was going on."

The shortages at the individual gas stations are also said to be caused by the difficulties facing tanker truck operators in resupplying individual gas stations, rather than the wholesale shortage of fuels in larger-scale holding tanks. So the shortage itself is mostly on the retail side of the business—stations aren't able to get enough fuels fast enough to keep up with demand and with hoarding simultaneously. Individual state governors have already taken action to alleviate some of the shortage.

Gasbuddy petroleum analyst Patrick De Haan blamed shortages at the gas station level and the ability of tanker trucks to resupply stations.

"I heard about it on the news but I didn't think I would actually see it happening later in the day," another Atlanta-area car owner told Autoweek. "We have a small car so it doesn't use that much gas, and we can switch to just one car if this lasts a while. But it seems like people only started hoarding it when they got scared about it by the news. Even after it comes back to normal people could still be hoarding it, that's what I'm mostly afraid of. It could be like with the paper hoarding last March. I know some people still buying lots of paper, more paper than they need. But, [we] can't do anything about it."

Shortages linked to panic-buying at gas stations this week appeared especially acute in North and South Carolina, Georgia, Virginia, with some industry watchers warning that the shortages could extend into June, due to a domino effect in the supply chain, persistent panic-buying, and heavy travel ahead of Memorial Day weekend. Shortages were also felt in Florida, Tennessee and Washington D.C.

"About 5-12 days of headaches if you need fuel in DC, FL, MD, TN. The situation may worsen slightly but will start to improve by this weekend," De Haan added on Twitter.

This means that the shortages on the retail side could last much longer, even as pipeline operations themselves return to normal this weekend.

Are you experiencing fuel shortages at stations in your area? Let us know in the comments below.