National average for gasoline tops $3 a gallon amid pipeline shutdown, rush to buy in Southeast
A driver leaves BJ’s gas station in search of gasoline after a cyberattack crippled the country’s largest fuel pipeline operated by Colonial Pipeline on May 11, 2021 in Norfolk, Virginia.
Jay Paul | Reuters
The national average for a gallon of gasoline surged above $ 3 for the first time since 2014 on Wednesday as much of the crucial colonial pipeline remains offline.
Fear of a supply shortage, consumers in southeastern states are going to the pump, making long lines, and in some cases wiping gas stations dry.
On average, Americans are now paying $ 3.008 for a gallon of gas, down from $ 2.985 on Tuesday and $ 2.927 a week ago.
In some southeastern states, the jump in prices is much greater. Georgians are now paying $ 2.951 a gallon, down from $ 2.715 a week ago. In North Carolina, the average is now $ 2,850, compared to $ 2,689 a week ago. In Virginia, prices have now risen from $ 2.741 to $ 2.871.
The spot bottlenecks in the worst affected countries are increasing. According to the latest data from GasBuddy, 15.4% of gas stations in Georgia are wiped out, while nearly 60% of gas stations in metropolitan Atlanta are empty.
In North Carolina and South Carolina, 24.8% and 13.4% of stations are empty, respectively. In Virginia, 15% of the stations are fuelless.
Patrick De Haan, Head of Petroleum Analysis at GasBuddy, noted that there are only minor failures at the rack level, which means that while there is enough fuel, there are not enough truck drivers to move it.
“It’s been a tough couple of days here,” said David Alexander, president of JT Alexander & Son, a North Carolina gas distributor, on CNBC’s Worldwide Exchange.
As of Wednesday morning, about 40% of its locations were running out of fuel after being “madly wiped out” by people standing in line all day, he said. On Tuesday morning only one of its locations was dry.
“We have to get this thing flowing in the next day or two or we’ll be in a mess,” he said.
Florida, Georgia, Virginia and North Carolina have all declared a state of emergency. In order to reduce the supply bottlenecks, the Ministry of Transport waived some restrictions on the transport of fuel by truck. In addition, Georgia has temporarily suspended its gas tax amid the rise in fuel prices.
Alexander said supplies were fine until people got nervous and went to the pump.
“The pipeline has been down since Friday. We went through the weekend and everything was fine … Panic only creates so much demand that we can’t keep up,” he said.
Energy Secretary Jennifer Granholm said Colonial Pipeline is expected to make the decision whether or not to fully resume operations by the end of the day on Wednesday.
On Tuesday evening, the company announced that it was making progress in its “round-the-clock effort” to get the system back online and that some systems were back online. On Monday, the company announced that it was aiming for a full restart by the end of the week.
Once the pipeline, which stretches for 5,500 miles and carries 45% of the east coast’s fuel supply, is back online, operations will not return to normal immediately. For one, the fuel moves through the pipeline at a rate of five miles per hour. Depending on how full it was at the time it was shut down, it will take some time for gas to flow from both ends.
“If they get it going again, everything will work right, it’s a big, huge, massive undertaking,” said Alexander. “They’ve never turned it off before, so they’re sure to have problems here and there.”
Not without options
Should the pipeline that was the target of a ransomware attack last week remain offline for an extended period of time, there are other ways to transport fuel along the east coast.
Refined gasoline can be imported from Europe, and the Jones Act could also be dispensed with. Officials said Tuesday that there have been no calls to date to waive the law requiring goods transported between US ports to be carried on ships flying the US flag.
Rail and truck deliveries are other possible options.
Meanwhile, officials stressed that consumers should only fill their tanks when needed.
“While there was no reason to hoard toilet paper, for example, at the start of the pandemic, there should be no reason to hoard gasoline, especially given the pipeline should be essentially operational by the end of this week and beyond,” said Granholm on Tuesday.
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