U.S. Southeast Sees Gas Shortages Due to Colonial Pipeline Cyberattack

Tank farm operated by Colonial Pipeline (file image courtesy Colonial Pipeline)

Published May 11, 2021 8:44 PM by The Maritime Executive

The effects of the Colonial Pipeline cyberattack are becoming more pronounced, according to energy market analysts. Gas stations in some markets in the U.S. Southeast are reporting shortages, and a demand spike caused by panic buying can be seen in all U.S. regions, according to fuel consultancy GasBuddy. 

The U.S. Southeast is especially dependent upon the Colonial Pipeline for fuel supplies, and it has seen the most disruption. In Virginia, about eight percent of all gas stations report that they are out of gasoline, reflecting demand from panic buying. In Georgia, Gov. Brian Kemp has temporarily suspended collection of the state gasoline tax in an attempt to reduce the consumer's price at the pump. Supplies of diesel and jet fuel appear to be less affected so far, though some airlines have rerouted a handful of flights to take account of available fuel supplies at airports. 

The effect on chartering has been mixed, with reports of speculative inquiries on EU-to-U.S. routes early in the week but few firm fixtures. Going in the other direction, rates on the U.S. Gulf-to-Europe and U.S. Gulf-to-Mexico routes have hit a 12-month high for clean tankers, according to Platts, as Gulf Coast refiners look for alternative markets for fuel that would normally be transported by the pipeline. Reports of floating storage chartering in the U.S. Gulf of Mexico indicate that five refiners have booked or tentatively booked floating storage, according to Reuters. 

The research consultancy Rystad Energy told The New York Times that it expects the market disruption to be short-lived, given that Colonial expects to return to full or near-full operating capacity by the end of the week.  

The criminal hacking organization DarkSide has claimed responsibility for the ransomware attack on Colonial Pipeline, and the FBI has confirmed that the group is responsible. In a statement Monday, U.S. President Joe Biden said that there is no evidence that the cyberattack was attributable to the Russian government - though there are indications that the ransomware service "resides in Russia." 

Colonial has said that it is working to restore full operations by the end of the week, and that it is already resuming some of its services using backup methods.