HOUSTON, Texas — A cyber-attack that forced one of the top U.S. fuel pipelines – stretching from Texas to the East Coast – to shut down this weekend has analysts are worried the situation could result in a spike in gas prices.
There is currently no information on when service in the pipeline will be restored, and “the number of days that the line is out of service is critical,” Tom Kloza, global head of energy analysis for the Oil Price Information Service, which tracks gas prices at 140,000 US stations, told CNN Business.
Colonial Pipeline executives have fully acknowledged the security breach, which has temporarily halted all pipeline operations and impacted IT systems.
“The greatest concern is in coastal states from Georgia north to the Delmarva Peninsula,” Kloza said. He pointed out that Northeastern supply can readily be supplemented with foreign imports of gasoline, but several other states don’t have that advantage. “Tennessee is also a primary supply concern, as it often runs out of gasoline during normal circumstances,” he said.
Andy Lipow, Houston-based oil consultant and President of Lipow Oil Associates, emphasized that the timeline is crucial. “Two days can be made up in orderly fashion,” he said of the current shutdown. Five days, however, could be a much more significant blow to logistics.
The attack could also trigger challenges for jet fuel deliveries, Kloza said. Many major East Coast airports maintain only three to five days worth of inventory, so a two to five day suspension of a pipeline that in some cases moves fuel directly to major airports — such as Atlanta’s Hartsfield Jackson Airport — can have a dramatic impact.
The national average price of regular gas already stands at $2.94 a gallon, up more than 60% from a year ago when prices and demand were bottoming out. The national average could surpass $3 a gallon this summer, and even get higher if any hurricanes hit the Gulf Coast or if there are any additional disruptions to supply.