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Colonial Pipeline slowly restarts as Southeast U.S. scrambles for fuel

Stock MarketsMay 13, 2021 07:59AM ET
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4/4 © Reuters. FILE PHOTO: Holding tanks are seen at Colonial Pipeline's Linden Junction Tank Farm in Woodbridge, New Jersey, U.S. in an undated photograph. Colonial Pipeline/Handout via REUTERS./File Photo 2/4

By Joseph Menn and Stephanie Kelly

(Reuters) - Colonial Pipeline began to slowly restart the nation's largest fuel pipeline network on Wednesday after a ransomware attack shut the line, triggering fuel shortages and panic buying in the southeastern United States.

It will take several days for the 5,500 mile (8,850 km) pipeline to return to normal operations, Colonial said, even as motorists in southeastern states jammed stations seeking fuel. A return to ample supplies could take two weeks, analysts said.

The cyberattack halted 2.5 million barrels per day of shipments of gasoline, diesel and jet fuel last Friday after the most disruptive cyberattack ever on U.S. energy infrastructure.

Sources familiar with Colonial's response said the company does not plan to pay the ransom demanded by hackers who encrypted data on the pipeline.

Colonial said it was working with cybersecurity experts to investigate the attack and had taken additional security measures before beginning the restart. The company said its control center is handling the restart of the pipeline, which stretches from refineries on the U.S. Gulf Coast to consumers in Mid-Atlantic and Southeast states.

The supply crunch sparked panic buying in the U.S. Southeast, bringing long lines and high prices at gas stations ahead of the peak summer driving season.

Nearly 60% of gas stations in metro Atlanta were without gasoline, tracking firm GasBuddy said. Its survey showed 65% of stations in North Carolina and 43% in Georgia and South Carolina without fuel. Virginia also reported high outages.

“Our top priority right now is getting the fuel to the communities that need it," U.S. Transportation Secretary Pete Buttigieg told reporters.

Fuel stocks in the U.S. Northeast will likely hit five-year lows this week as the restart slowly progresses, said S&P Global (NYSE:SPGI) Platts analyst Richard Joswick. Full recovery "will take a couple of weeks at least," he added.

RISING TENSIONS

At a Citgo station in East Atlanta, Charles Williams (NYSE:WMB), 66, a local musician, filled his wife's Mini Cooper after seeing people with large jerry cans loading up.

"I wouldn't say I know they're hoarding, but I don't know if they're helping," he said.

Privately owned Colonial Pipeline opened portions of the line manually in Georgia, Maryland, New Jersey and the Carolinas. It also accepted 2 million barrels of fuel to begin efforts to "substantially" restore operations by week's end, the company has said.

The average national gasoline price rose to above $3.00 a gallon, the highest since October 2014, the American Automobile Association said.

Fuel industry representatives urged consumers to stop panic buying. They noted the country has plenty of gasoline supplies and said hoarding is creating shortages in areas not served by the pipeline.

"Retailers right now have sold several days worth of inventory within a few hours," said Rob Underwood, President of the Energy Marketers of America.

Four southeastern states - Florida, North Carolina, Virginia and Georgia - joined federal regulators in relaxing driver and fuel restrictions to speed deliveries of supplies. Georgia suspended sales tax on gasoline until Saturday.

The FBI has accused a shadowy criminal gang called DarkSide of the ransomware attack. The group, believed to be based in Russia or Eastern Europe, has not directly taken credit, but on Wednesday it claimed to have breached systems at three other companies, including an Illinois tech firm.

Russia's embassy in the United States rejected speculation that Moscow was behind the attack. On Monday, Biden said there was no evidence so far that Russia was responsible.

REFINERS, AIRLINES REACT

It was not known how much money the hackers are seeking.

Gulf Coast refiners that move fuel to market on the Colonial Pipeline have cut processing. Total SE trimmed gasoline production at its Port Arthur, Texas, refinery, and Citgo Petroleum pared back at its Lake Charles, Louisiana, plant.

Citgo said it was moving products from Lake Charles and "exploring alternate supply methods into other impacted markets." Marathon Petroleum (NYSE:MPC) said it was "making adjustments."

Several airlines have been transporting fuel by truck or fueling planes at destinations rather than at East Coast origins. American Airlines (NASDAQ:AAL) said it would resume on Thursday non-stop service on two long-haul flights out its Charlotte, North Carolina hub.

Delta Air Lines (NYSE:DAL) Chief Executive Ed Bastian said the airline has been told fuel supplies will be available "hopefully by the end of the week and as long as those predictions come true hopefully we'll be OK."

Colonial Pipeline slowly restarts as Southeast U.S. scrambles for fuel
 

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Comments (14)
Silence Dogood
Silence Dogood May 13, 2021 4:21PM ET
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Putin sees Biden for what he is.. This is likely just the beginning.. yeah for the vegetable in chief.
Steve Blevins
Steve Blevins May 13, 2021 3:21AM ET
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Jimmy Carter 2.0!
Jack Hudson
Jack Hudson May 13, 2021 3:21AM ET
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O'biden
Roger Miller
Roger Miller May 12, 2021 11:26PM ET
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Notice how this administration and the Democrats have gone from being openly hostile towards Russia every chance they get to the total opposite. Makes one wonder if the Russians have something on them. Do we know what info was obtained in the Solar Winds hack?
Gene Kret
Gene Kret May 12, 2021 10:14PM ET
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Its Trumps fault! Lol
buylow sellhigh
buylow sellhigh May 12, 2021 9:58PM ET
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Am I supposed to believe this ****and that there's no way to manually open a closed valve!!! How stupid do you have to be. 🤯
Easy and Quick Trans Accounting
Easy and Quick Trans Accounting May 12, 2021 8:55PM ET
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Oil mafia knows their job well....First Suez Canal fiasco then hack attack and if not war in middle east....Oil mafias has it all figured out....
Roger Miller
Roger Miller May 12, 2021 8:55PM ET
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How is restricting fuel consumption good for “oil mafias”? If people are not using the end product it means refiners have to scale back production and less oil is consumed.
Steve Blevins
Steve Blevins May 12, 2021 8:38PM ET
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It's Biden's fault!
Rahul Mishra
Rahul Mishra May 12, 2021 4:32PM ET
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fistfight , shortages. why does this sound like news from India?
William Bailey
William Bailey May 12, 2021 3:39PM ET
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Good!! Solar cheaper
Rick Baier
Rick Baier May 12, 2021 2:57PM ET
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I must also add Joe Biden has exceded my expectations.I thought it would take him about 9 months to wreck the country.
William Bailey
William Bailey May 12, 2021 2:57PM ET
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Trump wrecked it last year...
Rick Baier
Rick Baier May 12, 2021 2:55PM ET
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I'll trade you 24 pack of toilet paper for 5 gallons of gas. Sounds insane dosent it?
William Bailey
William Bailey May 12, 2021 2:55PM ET
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Actually, yes , *****the debters in wallstreet and home owners who pushed up home prices with cheap debt . Time for financial repression on honest savers to bail out debters !!! Fed running out of bond instraments to buy, just like BOJ!!! Sputter sputter stock / housing underwater decades coming
William Bailey
William Bailey May 12, 2021 2:55PM ET
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William Bailey meant time to stop financial repression
James Pattison
James Pattison May 12, 2021 1:56PM ET
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Biden gas lines...
Aniebiet Akang
Aniebiet Akang May 12, 2021 12:41PM ET
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What does that spell for DXY?
Gerry Baurich
Gerry Baurich May 12, 2021 12:41PM ET
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bad for DXY
Notvery Goodathis
Peteymcletey May 12, 2021 10:45AM ET
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Thanks Joe
 
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