Colonial Pipeline Hack Threatens Fuel Supplies

Temporary hours of service wavier issued for truck drivers hauling fuel to East Coast.

May 11, 2021

Fueling Tanker Unloading Gasoline at Gas Station

ALEXANDRIA, Va.—It’s expected to take several days for the Colonial Pipeline, North America’s biggest petroleum pipeline, to recover from Friday’s cyberattack that halted shipments of gasoline and other fuels, raising concerns about possible shortages.

The U.S. Environmental Protection Agency (EPA) has issued a fuel waiver for the Mid-Atlantic to help alleviate fuel shortages in states whose supply of reformulated gasoline has been impacted by the pipeline shutdown. The EPA has waived the federal Reid vapor pressure requirements for fuel sold in Reformulated Gasoline areas of District of Columbia, Maryland, Pennsylvania, and Virginia to facilitate the supply of gasoline. This waiver will continue through May 18.

The Federal Motor Carrier Safety Administration issued a temporary hours of service exemption that applies to commercial drivers transporting gasoline, diesel, jet fuel and other refined petroleum products to Alabama, Arkansas, the District of Columbia, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas and Virginia.

Energy analysts warn that a prolonged suspension of the pipeline could boost prices at the pump along the East Coast and leave some smaller airports scrambling for jet fuel.

AAA suggests gas prices could climb this week in response to the pipeline shutdown. “This shutdown will have implications on both gasoline supply and prices, but the impact will vary regionally,” said Jeanette McGee, AAA spokesperson. Areas including Mississippi, Tennessee and the East Coast from Georgia into Delaware are most likely to experience limited fuel availability and price increases.

Monday afternoon, Colonial Pipeline reported that it is dedicating “vast resources” to restoring pipeline operations in compliance with federal regulations. “Restoring our network to normal operations is a process that requires the diligent remediation of our systems, and this takes time,” the announcement said.

The company added that it proactively took certain systems offline to contain the threat and is working to ensure that the systems are brought back online safely.

“Our primary focus continues to be the safe and efficient restoration of service to our pipeline system, while minimizing disruption to our customers and all those who rely on Colonial Pipeline,” the announcement said. “We continue to evaluate product inventory in storage tanks at our facilities and others along our system and are working with our shippers to move this product to terminals for local delivery.”

On Monday, segments of the Texas-to-New Jersey line were brought back online in steps, which helped ease immediate concerns that pumps in highly populated East Coast areas could run dry. However, emergency shipments of gasoline and diesel from Texas are being trucked to Atlanta and other Southeast cities, and traders have been seeking vessels to deliver fuel to coastal terminals.

“The liquid fuels distribution system is complex and relies upon consistent operation of various components to deliver fuels to consumers when and where they need it. When any one of these components is disrupted, it can cause supply challenges throughout the system, and it may take time for these challenges to be resolved and the markets return to normal,” said Jeff Lenard, NACS vice president for strategic industry initiatives, NACS.

“The current situation concerning the operations of the Colonial Pipeline supplying the East Coast market is a temporary situation that will be resolved as quickly as possible. In the meantime, convenience retailers and fuel distributors are exploring all available options to acquire fuel for their customers,” Lenard said. “Once the pipeline resumes operations, it will take time for supply conditions to return to normal. Patience and understanding during this period will go a long way in supporting these efforts.”

The 5,500-mile Colonial Pipeline runs from the Gulf Coast to Linden, N.J. and transports 45% of the fuel consumed on the East Coast, according to the company’s website. Yesterday, the Federal Bureau of Investigation said a hacker gang known as DarkSide, a group that develops and markets ransomware hacking tools for other criminals who commit the crimes, reports CNBC. DarkSide said in a post on the dark web that it wasn’t to blame for the attack and promised to do a better job of screening future customers that buy its malware.