Gas prices are ticking up after the Colonial Pipeline ransomware attack — here’s where drivers will be most affected
Just ahead of Memorial Day weekend — a time when families may be itching to get out and greet summer after a long, hard pandemic winter — comes a cybersecurity attack forcing the shutdown of a vital pipeline for gasoline.
It’s an event that could propel already-increasing gas prices even higher, potentially reaching prices that drivers haven’t seen since late 2014.
On Friday, the Colonial Pipeline Company learned it was the victim of a ransomware attack and temporarily shut down its operations.
The company delivers approximately 45% of all fuel to the East Coast in a pipeline that stretches from Texas to the New York Harbor, according to AAA.
The outage could push the national average price for gasoline sold at U.S. retail outlets above $3 gallon by Memorial Day.
It takes between 15 to 18 days for fuel to travel along the pipeline between those points, AAA said.
Over the weekend, the national average on a price of gas increased a penny to $2.96, according to AAA spokeswoman Jeanette McGee. By Tuesday morning, the national average had increased to $2.98, according to AAA data.
“The shutdown of the Colonial Pipeline in response to a ransomware attack is likely to push the national average price for gasoline sold at U.S. retail outlets above $3 gallon by Memorial Day, ” said Brian Milne, editor and product manager at commodity analysis provider DTN.
“That would mark an $0.11 gallon increase from May 3. We’re already seeing price increases taking place now, so the price response to the ransomware attack has been nearly immediate,” he said.
More than 37 million people plan to travel at least 50 miles from home during the upcoming Memorial Day Weekend, according to AAA estimates. That would be a 60% increase from the 23 million people who traveled during the last Memorial Day Weekend, the smallest number since AAA began counting in 2000.
But any pain at the pump isn’t going to be evenly spread. Drivers in southeastern states will most likely be the ones paying more or facing temporary shortages, experts say.
Indeed, early data indicated some gas stations in this area were already out of gas. For example, 7.6% of Virginia gas stations and 4.8% of North Carolina gas stations were out of gas by early Tuesday morning, according to GasBuddy data.
Drivers in southeastern states will most likely be the ones paying more or facing temporary shortages.
The potential impact on everyday gas prices underscores still more complexities and weak spots in an episode that’s put them on stark display.
By Sunday, Colonial’s smaller lines were back up and running while mainlines remained off, the company said. By Monday afternoon, the company said the “situation remains fluid and continues to evolve” but the aim is “substantially restoring operational service by the end of the week.”
If the company meets that goal, it can avoid a panic at the pump, and longer lasting consequences, analysts say.
On Tuesday morning, oil futures were trading lower, on the expectation that the disruption was temporary.
Meanwhile, people still have to get places, now more than ever as state economies re-open. Here’s what to look out for in the coming days:
When would there be price increases — and by how much?
If gallon prices tick 3 cents higher, they’ll be at a point not seen since November 2014, according to AAA data. It was $1.84 a year ago on Monday, she noted.
The outage could likely put pump prices above that range with a 3 cent to 7 cent increase as early as this week, McGee said. The affected states include a region that spans from Mississippi to Tennessee and Georgia, up to Delaware, she said.
Though the country has adequate gas supplies, this region doesn’t have immediate, easy access to alternate supplies, she said.
Low supplies or high prices could complicate holiday plans and cut into budgets. Nashville, Tenn. and Myrtle Beach, S.C. are two the top projected travel destinations during the Memorial Day Weekend, according to AAA estimates.
The impacted states include a region that spans from Mississippi to Tennessee and Georgia, up to Delaware.
North of Delaware, states like Pennsylvania, New York and New Jersey have access to different pipelines and ports, McGee noted.
If drivers west of the Mississippi River are spotting increases, it’s an unrelated reflection of rising demand that’s mixed with a shortage of fuel tank truck drivers, she added.
Time is money, said Patrick De Haan, head of petroleum analysis for GasBuddy. Even if operations get back to normal by Friday, De Haan said, “that leaves a lot of days where there’s not going be a lot of supply.”
The affected region could include Tennessee, the Carolinas, most of Georgia, Birmingham, Ala. and the most northern parts of Florida.
In worst-case scenarios, De Haan said drivers in the affected Southeastern region could face up to 30-cent gallon hikes while everyone else pays a couple cents more.
De Haan said the affected region could include Tennessee, the Carolinas, and most of Georgia, as well as Birmingham, Ala. and potentially the most northern parts of Florida.
Most of all, don’t panic and fill up now, McGee and De Haan both said. That could drain supplies and push prices even higher, they said.
“If you don’t need to absolutely travel in Southeastern states, don’t do it, because we are going to face widespread outages in those affected areas if motorists cannot conserve gasoline,” De Haan said.
Here’s where some simple fuel-efficiency tips are especially important, McGee said.
That includes taking steps like avoiding rush hour if possible, combining errands, removing bike racks and roof racks that can weigh down a vehicle and cause it to use up more fuel, McGee said.
“It’s about being a smart driver,” she said.
Myra Picache contributed to this report .
Also see: Here’s what the shutdown of the Colonial Pipeline means for gas prices and energy markets