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Colonial Restarts Operations After Cyberattack As Panic-Buying Mounts In Southeast

May 12, 2021
Originally published on May 13, 2021 7:13 am

Updated May 12, 2021 at 6:01 PM ET

Colonial Pipeline said Wednesday it has "initiated the restart of pipeline operations" after suffering a cyberattack while warning it would take several days for supply to return to normal.

The restart of operations around 5 p.m. ET is welcome news across the Southeast, which was gripped by a wave of panic-buying that led to severe gasoline shortages over the last two days. The hoarding of gasoline happened after Colonial said it would suspend supplies through a critical pipeline following the cyberattack.

The announcement comes as stations have been pumping out days' worth of fuel in a matter of hours, and a growing number are going empty. The Consumer Product Safety Commission has been begging Americans not to put fuel into plastic bags, or anything not designed to carry gasoline.

And governors have been declaring states of emergencies while pleading with residents not to panic-buy or fill up their tanks when they don't need to — requests that so far seem futile.

The concern over gasoline availability has taken on a life of its own and sparked a self-perpetuating problem.

Concerns over potential shortages are driving panic-buying and hoarding, which is then creating actual shortages. Those shortages then go on to spur even more panic-buying, aggravating the situation even further.

All this is happening even as the country has substantial stockpiles of gasoline; it's getting them to the places in need and calming panic that are proving the twin challenges.

"While it may feel like a shortage, the United States isn't running out of gas, and every facet of this industry is working to get that gasoline to you," Susan Grissom, chief industry analyst at the American Fuel & Petrochemical Manufacturers trade group, said Wednesday.

According to data from the app GasBuddy, as of Wednesday afternoon, at least 40% of gas stations reported having no gasoline in Virginia, Georgia, North Carolina and South Carolina, while Washington, D.C., Florida, Maryland and Tennessee all had outages at more than 10% of stations.

Those statewide averages don't capture the scope of the problem in certain metro areas, however, as a number of Southern cities are experiencing outages at 75% of their gas stations, or even more.

Meanwhile, the average price of gasoline in the U.S. has topped $3 a gallon for the first time in seven years. Prices had been rising even before the pipeline crisis as the summer driving season coincided with a nationwide economic revival. But analysts said the pipeline hack and fuel hoarding may be adding several cents per gallon, helping push prices over the $3 mark.

The White House on Wednesday said the Department of Transportation would allow states including Alabama, Georgia, Kentucky and Virginia to use interstate highways to transport "overweight loads of gasolines."

The Biden administration has already taken a series of actions to deal with the supply disruptions, including temporarily lifting or easing a number of regulations in an attempt to boost the availability of gasoline in affected regions.

The DOT has waived hours-of-work limits for truckers carrying fuel, while the Environmental Protection Agency has eased some gasoline requirements designed to reduce local pollution. The administration is considering a waiver of the Jones Act, which mandates only U.S.-built ships can deliver between U.S. ports, to allow more ships to help move gasoline up the coast.

Individual states are also easing restrictions and urging calm, telling residents that panicking to run out and buy gasoline is counterproductive.

In Alabama, Gov. Kay Ivey emphasized on Tuesday that "a shortage has not reached Alabama at this time" and that an overreaction would only create a problem for a state that so far had been spared.

In Georgia, Gov. Brian Kemp lifted weight limits for fuel trucks in the state and temporarily suspended the gas tax.

"There is no need to rush to the gas station to fill up every tank you have and hoard gas," Kemp said Tuesday. "With the measures we have taken today, I am hopeful we can get more supply to stations and get through to this weekend when we hope Colonial will return to normal."

Last week, hackers attacked Colonial Pipeline to hold its software systems for ransom. Concerned about what the hackers might be able to do with control of its computer systems, the company shut down its entire pipeline system, which delivers around 45% of the East Coast's gasoline, diesel and jet fuel.

That caused a disruption in supplies, raising particular concern for the Southeast, which relies heavily on pipelines and trucks for fuel. (The Northeast can turn to shipments by sea from Europe.) Trucks can help compensate for the pipeline outage, but the industry is currently constrained by a shortage of qualified drivers.

The news of the reduction in supply caused a run of panic-buying that greatly exacerbated the shortages. This level of panic would create shortages even in normal conditions, industry experts said, and in fact some gas stations outside the pipeline's service area are now empty because of the demand surge.

Now the industry will be watching closely to see how quickly Colonial returns to full operations, and whether consumers respond by returning to their normal fueling habits.

Turning on a massive pipeline is not as easy, or as quick, as flipping a switch.

"Some markets served by Colonial Pipeline may experience, or continue to experience, intermittent service interruptions during the start-up period," the company said in a statement Wednesday evening. "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."

Copyright 2021 NPR. To see more, visit https://www.npr.org.

RACHEL MARTIN, HOST:

Long lines, empty tanks, pumps with signs that say no gas - the outage of Colonial Pipeline has created a challenge for gas stations in the Southeast. That pipeline shut down last Friday after a cyberattack. Now it's reopening. The biggest problem, though, has been the drivers who rushed out to gas stations in a panic.

NPR's Camila Domonoske is with us this morning. Hi, Camila.

CAMILA DOMONOSKE, BYLINE: Hi, Rachel.

MARTIN: Let's start with the pipeline itself. You can't just flip a switch and turn it back on again, right?

DOMONOSKE: It's more complicated than that. There are lots of switches, for one thing. Colonial is in the process of restarting the pipeline. That started around 5 p.m. yesterday. And we're talking about a huge pipeline. It runs from the Gulf Coast up to New Jersey. It carries 45% of the East Coast's gasoline, diesel and jet fuel. So you can imagine it will take several days to restore this whole supply chain to normal. The company's warning of intermittent disruptions. But, you know, solving the problem here is not just about restoring the supply. It's also important to end the panic that people are experiencing. So hopefully this announcement that the pipeline is coming back online, hopefully that helps there, too.

MARTIN: So say more about that, Camila. Explain how people's panic is affecting all this.

DOMONOSKE: Yeah. Right now, a lot of states are really stuck in this vicious cycle where fear about potential shortages in the future drives panic buying. Panic buying creates shortages, and then those shortages lead to more panic buying. We're hearing of gas stations that are selling multiple days' worth of gas in a matter of hours. So even if your supply chain is running like normal, it's inevitable you would have a shortage in that situation. Right?

MARTIN: Right.

DOMONOSKE: So as of last night, according to data from GasBuddy, that app, North Carolina - in that state, 74% of gas stations had no gasoline at all.

MARTIN: Wow.

DOMONOSKE: And that's a really alarming number, right? It's natural to hear that and to worry. So I just want to pause here to really emphasize that the problem that's being experienced right now is overwhelmingly due to people worrying and then going and getting gas when they don't need it. So you've got everyone from governors to gas stations emphasizing, please fill up like normal; don't hoard gas. There's not actually a shortage of gasoline, so you don't need to panic.

MARTIN: So they're saying there's not actually a supply issue. Is this all, then, in people's imagination, just going to the worst-case scenario?

DOMONOSKE: Yeah - I mean, there clearly are shortages at gas stations. And the big question is, would there be those shortages if people weren't panicking? Right? And there is an underlying distribution challenge. With the pipeline down, gasoline isn't moving from the Gulf Coast into this section of the South. There was gasoline in storage already before the pipeline went down, so that just has to get out to gas stations. That's done by truck. And here we are seeing an issue with this huge surge in demand from the panic buying. You need more trucks to get the gasoline around, and there's a trucker shortage right now. So that's part of why you've seen things like the federal government and state governments easing restrictions on the number of hours that truckers can work, on how heavy trucks can be. That's meant to make it easier to move gasoline around on roads to help get them to gas stations because you can have gasoline - that's why everyone's saying there isn't a shortage - but is it in the right place at the right time? When that's not happening, that's when people find that they can't fill up.

MARTIN: Are these shortages, real or imagined, affecting gas prices?

DOMONOSKE: Well, gas prices are rising. We actually just hit $3 a gallon on the national average for the first time in seven years. And certainly, this doesn't help gas prices. Right? And in some areas, it is causing spikes. But nationwide, there are other forces at play here. We've got seasonal activity, the return of economic activity as people get vaccinated. So this isn't the only reason for the price increase, which also means that the pipeline coming back up doesn't mean prices will necessarily go down.

MARTIN: NPR's Camila Domonoske.

Thank you.

DOMONOSKE: Thanks. Transcript provided by NPR, Copyright NPR.