Colonial Pipeline Officials Say There is No Fuel Shortage Amid Service Disruption

After the Colonial Pipeline was hit by a cyberattack, there was widespread concern that the supplies of jet fuel, gasoline and diesel could be disrupted along the East Coast.

However, after operations were halted due to a ransomware attack, officials from the company said there is no fuel shortage.

Colonial said it is in the process of restarting some of its network. While the main pipeline remains offline, some smaller lines are operational, the company said Sunday. There is no word yet when the company will completely restart the pipeline.

"The time of the outage is now approaching critical levels and if it continues to remain down we do expect an increase in East Coast gasoline and diesel prices," IHS Markit Executive Director Debnil Chowdhury told the Associated Press.

For more reporting from the Associated Press, see below.

Colonial Pipeline
Alpharetta, Georgia-headquartered Colonial Pipeline was forced to shut down its oil and gas pipeline system on Friday after a ransomware attack that has slowed down the transportation of oil. The company said Sunday that there is no fuel shortage due to the attack or shutdown of operations. Above, fuel holding tanks are seen at Colonial Pipeline's Linden Junction Tank Farm on May 10, 2021 in Woodbridge, New Jersey. Michael M. Santiago/Getty Images

Colonial Pipeline transports gasoline and other fuel through 10 states between Texas and New Jersey, and delivers about 45 percent of the fuel consumed on the east coast, according to the company.

The last time there was an outage of this magnitude was in 2016, he said, when gas prices rose 15 to 20 cents per gallon. But the Northeast had significantly more local refining capacity at that time, potentially intensifying any impact.

Meanwhile, the FBI on Monday said the ransomware attack had been carried out by a criminal gang known as DarkSide, which cultivates a Robin Hood image of stealing from corporations and giving a cut to charity.

In response to the attack, the Biden administration loosened regulations for the transport of petroleum products on highways as part of an "all-hands-on-deck" effort to avoid disruptions in the fuel supply.

If the pipeline outage persists, the industry may want to turn to barges to transport fuel, but that could require a waiver of the Jones Act, a U.S. maritime law that requires products shipped between U.S. ports to be moved by American-flagged ships.

The pipeline utilizes both common and custom technology systems, which could complicate efforts to bring the entire network back online, according to analysts at Third Bridge.

Gasoline futures ticked higher Monday. Futures for crude and fuel, prices that traders pay for contracts for delivery at some point in the future, typically begin to rise each year as the driving season approaches. The price you pay at the gas pump tends to follow.

The average U.S. price of regular-grade gasoline has jumped 6 cents over the past two weeks, to $3.02 per gallon, which is $1.05 higher than it was a year ago.

Those year-ago numbers are skewed somewhat because the nation was going into lockdown due to the pandemic.

The attack on the Colonial Pipeline could exacerbate the upward pressure on prices if it is unresolved for a period of time.

Colonial Pipeline Attack
A major pipeline that transports fuels along the East Coast says it had to stop operations because it was the victim of a cyberattack. Colonial Pipeline said in a statement late Friday that it “took certain systems offline to contain the threat, which has temporarily halted all pipeline operations, and affected some of our IT systems." Above, in this September 8, 2008, file photo, traffic on Interstate-95 passes oil storage tanks owned by the Colonial Pipeline Company in Linden, New Jersey. Mark Lennihan/AP Photo