Colonial Restarts Operations After Cyberattack As Panic-Buying Mounts In Southeast

Updated May 12, 2021 at 6:01 PM ET

Colonial Pipeline said Wednesday it has "initiated the restart of pipeline operations" after suffering a cyberattack while warning it would take several days for supply to return to normal.

The restart of operations around 5 p.m. ET is welcome news across the Southeast, which was gripped by a wave of panic-buying that led to severe gasoline shortages over the last two days. The hoarding of gasoline happened after Colonial said it would suspend supplies through a critical pipeline following the cyberattack.

The announcement comes as stations have been pumping out days' worth of fuel in a matter of hours, and a growing number are going empty. The Consumer Product Safety Commission has been begging Americans not to put fuel into plastic bags, or anything not designed to carry gasoline.

And governors have been declaring states of emergencies while pleading with residents not to panic-buy or fill up their tanks when they don't need to — requests that so far seem futile.

The concern over gasoline availability has taken on a life of its own and sparked a self-perpetuating problem.

Concerns over potential shortages are driving panic-buying and hoarding, which is then creating actual shortages. Those shortages then go on to spur even more panic-buying, aggravating the situation even further.

All this is happening even as the country has substantial stockpiles of gasoline; it's getting them to the places in need and calming panic that are proving the twin challenges.

"While it may feel like a shortage, the United States isn't running out of gas, and every facet of this industry is working to get that gasoline to you," Susan Grissom, chief industry analyst at the American Fuel & Petrochemical Manufacturers trade group, said Wednesday.

According to data from the app GasBuddy, as of Wednesday afternoon, at least 40% of gas stations reported having no gasoline in Virginia, Georgia, North Carolina and South Carolina, while Washington, D.C., Florida, Maryland and Tennessee all had outages at more than 10% of stations.

Those statewide averages don't capture the scope of the problem in certain metro areas, however, as a number of Southern cities are experiencing outages at 75% of their gas stations, or even more.

Meanwhile, the average price of gasoline in the U.S. has topped $3 a gallon for the first time in seven years. Prices had been rising even before the pipeline crisis as the summer driving season coincided with a nationwide economic revival. But analysts said the pipeline hack and fuel hoarding may be adding several cents per gallon, helping push prices over the $3 mark.

The White House on Wednesday said the Department of Transportation would allow states including Alabama, Georgia, Kentucky and Virginia to use interstate highways to transport "overweight loads of gasolines."

The Biden administration has already taken a series of actions to deal with the supply disruptions, including temporarily lifting or easing a number of regulations in an attempt to boost the availability of gasoline in affected regions.

The DOT has waived hours-of-work limits for truckers carrying fuel, while the Environmental Protection Agency has eased some gasoline requirements designed to reduce local pollution. The administration is considering a waiver of the Jones Act, which mandates only U.S.-built ships can deliver between U.S. ports, to allow more ships to help move gasoline up the coast.

Individual states are also easing restrictions and urging calm, telling residents that panicking to run out and buy gasoline is counterproductive.

In Alabama, Gov. Kay Ivey emphasized on Tuesday that "a shortage has not reached Alabama at this time" and that an overreaction would only create a problem for a state that so far had been spared.

In Georgia, Gov. Brian Kemp lifted weight limits for fuel trucks in the state and temporarily suspended the gas tax.

"There is no need to rush to the gas station to fill up every tank you have and hoard gas," Kemp said Tuesday. "With the measures we have taken today, I am hopeful we can get more supply to stations and get through to this weekend when we hope Colonial will return to normal."

Last week, hackers attacked Colonial Pipeline to hold its software systems for ransom. Concerned about what the hackers might be able to do with control of its computer systems, the company shut down its entire pipeline system, which delivers around 45% of the East Coast's gasoline, diesel and jet fuel.

That caused a disruption in supplies, raising particular concern for the Southeast, which relies heavily on pipelines and trucks for fuel. (The Northeast can turn to shipments by sea from Europe.) Trucks can help compensate for the pipeline outage, but the industry is currently constrained by a shortage of qualified drivers.

The news of the reduction in supply caused a run of panic-buying that greatly exacerbated the shortages. This level of panic would create shortages even in normal conditions, industry experts said, and in fact some gas stations outside the pipeline's service area are now empty because of the demand surge.

Now the industry will be watching closely to see how quickly Colonial returns to full operations, and whether consumers respond by returning to their normal fueling habits.

Turning on a massive pipeline is not as easy, or as quick, as flipping a switch.

"Some markets served by Colonial Pipeline may experience, or continue to experience, intermittent service interruptions during the start-up period," the company said in a statement Wednesday evening. "Colonial will move as much gasoline, diesel, and jet fuel as is safely possible and will continue to do so until markets return to normal."

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