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U.S. fuel crisis eases as pipeline returns to normal after hack – Metro US

U.S. fuel crisis eases as pipeline returns to normal after hack

Gas shortage in southeastern United States
Gas shortage in southeastern United States

(Reuters) -Widespread gasoline shortages along the U.S. East Coast began to ease slightly on Saturday as the operator of the nation’s biggest fuel pipeline said it was back to delivering “millions of gallons per hour” following last week’s cyberattack.

Ships and trucks were deployed to fill up storage tanks after the six-day Colonial Pipeline shutdown, the most disruptive cyberattack on record, triggered widespread panic buying that left filling stations across the U.S. Southeast dry.

“We have returned the system to normal operations, delivering millions of gallons per hour to the markets we serve,” said the company, which had begun gradual restart of the pipeline on Wednesday.

More than 13,400 gas stations surveyed in the east and south by fuel tracking app GasBuddy were experiencing outages on Saturday, down from 16,200 early the previous day.

On Saturday evening, about 75% of gas stations in Washington, D.C. were still without fuel, an improvement from Friday’s figure of 88%, the app showed. Shortages also eased in North Carolina and Virginia, but were about the same in Georgia.

U.S. gasoline demand dropped 12.6% from the previous week, probably due to an easing of “crazed” panic buying just after the pipeline shut, said Patrick De Haan, head of petroleum analysis at GasBuddy.

The nationwide average for a gallon of regular unleaded was $3.04 on Saturday, from $2.96 a week ago, according to AAA.

The pipeline outage accelerated increases in gasoline prices that were “already rising due to higher crude prices and demand ahead of Memorial Day,” said AAA spokeswoman Ellen Edmonds.

She was referring to the May 31 holiday that traditionally kicks off the U.S. summer driving season.

Places served by the pipeline saw the biggest price jumps this week – with Georgia and the Carolinas up 20 cents per gallon or more – but they should also see prices decline again as supplies improve, Edmonds said.

Florence, South Carolina had the nation’s biggest price increase at 30 cents, while prices rose 9 cents in D.C.

Ships deployed under emergency waivers were also moving fuel from U.S. Gulf Coast refiners to the northeast, while 18-wheel tanker trunks were ferrying gasoline from Alabama to Virginia, helping to stem the shortages.

U.S. crude prices could edge higher as refiners process more oil to catch up from the gasoline storage that was drawn down while the pipeline was shuttered, said Robert Yawger, analyst at Mizuho Securities.

The approach of Memorial Day helps make “the sense of urgency supersized” for refiners, Yawger added.

In Washington, D.C., Dennis Li was stuck on Friday at a Sunoco gas station that was out of fuel. He had tried to find gas at four stations during the day, with no luck.

“I’m running on empty to the point where I don’t want to drive anymore,” said Li, who is from Annapolis, Maryland.

INITIAL BREACH UNKNOWN

The hacking group blamed for the attack, DarkSide, said it had hacked four other companies including a Toshiba subsidiary in Germany.

Colonial Pipeline has not determined how the initial breach occurred, a spokeswoman said this week. The 5,500-mile (8,900-km) pipeline carries 100 million gallons of gasoline, diesel and jet fuel each day to East Coast markets from Texas refineries.

Colonial has not revealed how much money the hackers were seeking or whether it paid. Bloomberg News and the New York Times said it paid nearly $5 million.

Colonial said it would resume on Monday its regular nomination process, in which shippers seek space on the line.

It released a revised schedule to shippers, with estimated delivery dates. The schedule suggested that diesel loaded in Atlanta on Friday would arrive at the northernmost point in Linden, New Jersey, 10 days later, as would gasoline.

Steve Boyd, a senior managing director at fuel delivery firm Sun Coast Resources, estimated that with gasoline moving on the pipeline at half Colonial’s normal speed, it could take 12 to 20 days for new deliveries from Gulf Coast refineries to reach Linden.

Sun Coast has 75 trucks taking supplies from terminals in Alabama and Georgia to retailers as far away as Virginia.

“If customers need us for another week or three weeks, we’ll be there,” said Boyd.

(By Stephanie Kelly in New York, Jennifer Hiller in Houston, Rich McKay in Atlanta, Jessica Resnick-Ault in New York and Timothy Gardner in Bethesda, Maryland; additional reporting by Laura Sanicola, Joe Menn and Liz Hampton; Editing by Chris Reese and Clarence Fernandez)