Gas pipeline hack leads to panic buying in Southeast US

The disruption to the Colonial Pipeline also left airlines vulnerable

Panicked drivers scrambled to fuel their vehicles across the Southeast on Tuesday, leaving thousands of stations without gasoline as a vital fuel pipeline remained largely shut down after a ransomware attack.

The disruption to the Colonial Pipeline, which stretches 5,500 miles from Texas to New Jersey, also left airlines vulnerable, with several saying they would send jet fuel to the region by air to ensure that service would not be disrupted.

Gasoline in Georgia and a few other states rose 3 to 10 cents a gallon Tuesday, a jump typically seen only when hurricanes interrupt refinery and pipeline operations along the Gulf Coast.

The national average for a gallon of regular gasoline rose 2 cents Tuesday, with higher prices reported in the Southeast, according to the AAA motor club. The average increase was nearly 7 cents in South Carolina, 6 cents in North Carolina and 3 cents in Virginia.

Southern stations were selling two to three times their normal amount of gasoline Tuesday, according to the Oil Price Information Service, which tracks the industry. Some stations limited purchases to 10 gallons.

Nearly 8% of Virginia stations were without gasoline, more a result of panic buying than of shortage, Gas Buddy, a service that tracks gas prices, reported.

“There’s no gas, and people are getting frustrated,” said Ariyana Ward, a 19-year-old college student in Virginia Beach who waited 45 minutes to fill up. With some motorists taking time to fill cans as well as cars, she said, “people are getting into shouting matches.”

State leaders responded with measures intended to keep the flow of fuel steady and stabilize prices.

Gov. Brian Kemp of Georgia signed an executive order suspending his state’s gasoline tax, roughly 20 cents a gallon, through Saturday. He said the move would “help level the price for a little while,” and cautioned against panic buying. Gov. Roy Cooper of North Carolina, Gov. Ralph Northam of Virginia and Gov. Ron DeSantis of Florida each declared a state of emergency to suspend some fuel transport rules. DeSantis also activated the National Guard to cope with the emergency.

South Carolina’s attorney general, Alan Wilson, announced he was ready to invoke the state’s price-gouging law, making excessive overcharging a criminal offense. “I’m urging everyone to be careful and be patient,” Wilson said.

At the White House, Energy Secretary Jennifer Granholm told reporters, “We know we have gasoline; we just need to get it to the right places.” But she made no promises about when the pipeline, which was shut down to prevent the cyberattack from spreading, would resume operations, saying the company will decide Wednesday whether it is ready to do so.

She said she expected gas station operators to act “responsibly,” adding, “We have no tolerance for price gouging.”

The administration considered other steps that might alleviate shortages, including moving gasoline, diesel and jet fuel by train, or issuing a waiver for a 1920 law known as the Jones Act, which requires that maritime shipments be on vessels owned and staffed by Americans. But it was unclear if the right kind of either rail cars or foreign-registered ships were available.

“There are no easy solutions,’’ Granholm said.

The Environmental Protection Agency administrator, Michael Regan, issued an emergency waiver for fuel air emissions Tuesday to help alleviate fuel shortages in places affected by the pipeline shutdown, including the District of Columbia, Maryland, Pennsylvania and Virginia. The waiver will continue through May 18.

Colonial Pipeline, the company that operates the pipeline, has said it hopes to restore most operations by the end of the week. The attack, which the Federal Bureau of Investigation said had been carried out by an organized crime group called DarkSide, has highlighted the vulnerability of the American energy system. The pipeline provides the Eastern United States with nearly half its transportation fuel.

Colonial has remained largely silent, answering no questions about the kind of protections it had in place on both its computer networks and the industrial controls that run the pipeline.

In a statement late in the day Tuesday, Colonial said it had manually started one part of the pipeline and delivered about 41 million gallons of fuel to various locations on its system, from Atlanta, through the Carolinas and to Linden, New Jersey.

But the company said nothing about what factors will play into its decision on when to restart the pipeline. And it has not explained whether it found any evidence that the malware placed in its data systems could migrate to the operations of the pipeline.

Several experts noted that while the two networks are described as separate entities, they have considerable crossover. For example, one of the systems the ransomware group tied up tracks how much fuel each customer uses. Without that running, Colonial would not know how much fuel any of its customers were receiving — or how to get paid for it.

Industry analysts said the impact of the hacking would remain relatively minor as long as the artery was fully restored soon. “With a resolution to the shutdown in sight, the cyberattack is now treated as a small disturbance by the market and prices are trimming Monday’s panic-gains,” said Louise Dickson, an oil markets analyst for Rystad Energy.

Gasoline prices normally increase at this time of year as the summer driving season approaches. Even before Colonial Pipeline suspended operations, average national gas prices were rising nearly a penny per gallon each day.

Higher fuel prices affect lower-income people the most because they spend the highest percentage of their incomes on gasoline and typically drive less fuel-efficient vehicles. That makes gasoline prices a potential political issue after they have been relatively low for several years.

Several airports around the South and the Washington area may be affected over the next few days because they are connected to the pipeline and typically retain only a few days’ supply.

Airlines for America, an industry group, said Tuesday that “while a small number of airports are experiencing low inventories, the vast majority of U.S. airports have several days’ worth of jet fuel.”

In a 2018 report, the group argued that the interstate pipeline system used to supply jet fuel to airports had grown increasingly vulnerable to costly disruptions. And when disruptions occur, airlines have few good options beyond flying in extra fuel, adding stops to flights, or canceling and rerouting flights.

After the disruption last weekend, American Airlines said it had added stops to two daily flights out of Charlotte, North Carolina. One, to Honolulu, will stop in Dallas, where customers will change planes. The other, to London, will stop in Boston to refuel. The flights are expected to return to their original schedules Saturday.

Southwest Airlines said it was flying in supplemental fuel to Nashville, and United Airlines said it was flying extra fuel to Baltimore; Nashville; Savannah, Georgia; and Greenville-Spartanburg International Airport in South Carolina. United, Southwest and Delta Air Lines said they had not experienced any disruptions to their operations so far.