The Colonial Pipeline shutdown could affect gas prices — but only if operations don’t resume soon, experts say.
The company, which says it’s the “largest refined products pipeline” in the country, said in a statement Saturday that it was the “victim of a cybersecurity attack” involving ransomware and that it “proactively took certain systems offline to contain the threat,” temporarily shutting down all pipeline operations.
On Sunday, Colonial Pipeline said some “smaller lateral lines between terminals and delivery points” are operating again — but its major lines remain closed.
“We are in the process of restoring service to other laterals and will bring our full system back online only when we believe it is safe to do so, and in full compliance with the approval of all federal regulations,” it said.
It said Monday that the goal is to “substantially” restore operations by the end of the week.
“While this situation remains fluid and continues to evolve, the Colonial operations team is executing a plan that involves an incremental process that will facilitate a return to service in a phased approach,” the company said. “This plan is based on a number of factors with safety and compliance driving our operational decisions.”
Now, some are concerned about increased fuel prices resulting from the shutdown.
But experts say there’s no reason to worry yet. Here’s what to know.
How could the shutdown affect gas prices?
Colonial Pipeline’s system stretches more than 5,500 miles through the southern and eastern United States.
It transports more than 100 million gallons of fuel each day — or roughly 45% of “all fuel consumed on the East Coast,” the company says.
However, the shutdown is not expected to have an immediate effect on gas prices.
“About the @Colpipe outage due to cyberattack: I would not expect this to last long enough to make fuel pricing or supply an issue, but will continue to watch,” Patrick De Haan, head of petroleum analysis at GasBuddy tweeted. “Again — #gasprices are not impacted yet, and should not if Colonial’s operations return soon.”
“My guess is they’ll be able to restart the pipeline before any major issues develop,” De Haan tweeted.
Yury Dvorkin, an assistant professor of electrical and computer engineering at the New York University’s Tandon School of Engineering, told Fox Business that the shutdown will have a minimal effect on gas prices if it only lasts few days but could be much worse if it drags out.
“If supply is not restored in near future, what’s going to happen is you’re going to have more demand for gasoline than supply, and it will drive the prices,” Dvorkin said, according to Fox Business.
Andy Lipow, an oil analyst, agreed that prices wouldn’t be affected by a short shutdown but told The Associated Press that if operations are stalled for five or six days, it could cause shortages and price increases — especially between central Alabama and Washington, D.C.
De Haan also said that if the shutdown lasts more than five days, it may only affect parts of the Southeast.
“But they may not all be even across the affected states,” he said of challenges caused by the shutdown.
About the shutdown
Colonial says a third-party cybersecurity firm is investigating the attack and that it has contacted law enforcement and federal agencies.
“Colonial Pipeline is taking steps to understand and resolve this issue,” it said in a statement. “At this time, our primary focus is the safe and efficient restoration of our service and our efforts to return to normal operation. This process is already underway, and we are working diligently to address this matter and to minimize disruption to our customers and those who rely on Colonial Pipeline.”
The FBI said Monday it confirmed “Darkside ransomware” is responsible for the attack. Darkside is a cybercrime group that “makes money by hacking a victim’s network, encrypting their files so they can’t be accessed, and threatening to publish them online if they’re not paid a hefty fee,” NBC News reports.
“We continue to work with the company and our government partners on the investigation,” the FBI said in a statement.
Eric Goldstein, executive assistant director of cybersecurity at the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency, or CISA, said in a statement that the agency is “engaged with the company and our interagency partners regarding the situation.”
“This underscores the threat the ransomware poses to organizations regardless of size or sector,” Goldstein said. “We encourage every organization to take action to strengthen their cybersecurity posture to reduce their exposure to these types of threats.”
President Joe Biden was briefed on the situation Saturday, and the White House is working to avoid disruption to supply and to restore operations as soon as possible, The Washington Post reports.
The U.S. Department of Transportation’s Federal Motor Carrier Safety Administration on Sunday issued a regional emergency declaration for 17 states and Washington, D.C., to “support of relief efforts related to the shortages of gasoline, diesel, jet fuel and other refined petroleum products” in response to the shutdown.
The declaration creates more flexibility for carriers and drivers, including an exemption from hours of service restrictions for those transporting fuel to the included areas.