Sat, 24 Jul 2021

WASHINGTON D.C.: Supply disruptions caused by the shutdown at Colonial Pipeline---the country's top fuel pipeline network---could result in prices rising at pumps across the southeastern United States, with demand already picking up as drivers queued up to fill their tanks, industry experts said on Sunday.

Some smaller pipelines were restarted Sunday, but Colonial, which was forced to shut down due to a ransomware attack on Friday, has not indicated when its main pipelines will restart.

The network ships more than 2.5 million barrels per day of gasoline, diesel and jet fuel from the Gulf Coast to populous southeast and northeast states.

Florida, Georgia, Alabama, South Carolina, North Carolina, and Tennessee rely on the line for most of their fuel supplies.

Demand in some states served by the pipeline - including Alabama, Florida, Georgia and Tennessee - rose about 4.3 percent on Saturday, compared to a week earlier, said Patrick DeHaan, head of petroleum analysis at fuel tracking firm GasBuddy.

DeHaan said drivers should avoid panic buying. "Rushing out and filling your tank will make the problem much, much more acute and likely double or triple the length of any supply event, if it comes to that," as quoted by Reuters.

Gas prices have risen one cent on the gallon since Friday, said the American Automobile Association. The average price stood at $2.962 for regular unleaded gasoline, compared with $2.901 one week earlier, the AAA said.

Ernie Barsamian, chief executive officer of Tank Tiger, a U.S. terminal storage clearinghouse, said distribution centers that could see price increases are in Wilmington, North Carolina, Charleston, South Carolina and Savannah, Georgia.

Most of the terminals along Colonial Pipeline's route should have at least 10 days of supply, but since prices to sell now are higher, companies have not been incentivized to store fuel and some terminals could be running leaner, Barsamian added.

"Perhaps the biggest concern might be jet fuel," Tom Kloza, founder of the Oil Price Information Service, said. "... airports tend to really test the boundaries of just-in-time inventory practices," as reported by Reuters.

Colonial serves some of the busiest airports in the country - including Atlanta International Airport, one of the busiest in the world by passenger volume, and Charlotte Douglas International Airport.

The Colonial shutdown has not affected operations at Atlanta airport and its airlines are in close communications with fuel suppliers and confident the incident will be reconciled before there is an operational impact, a spokesman for the airport told Reuters.

Fuel suppliers will need to seek to transport stopgap supplies through other pipelines, but none of them have the capacity to compensate for Colonial's shutdown. Suppliers may also use barges and trucks, but those are more expensive.

The Plantation Pipeline is working with customers to take on more volume, said Melissa Ruiz, a spokeswoman for Kinder Morgan, which operates the line.

However, the pipeline can only carry a fraction of the fuel that would have gone through the Colonial Pipeline.

Colonial supplies about 45 percent of all fuel consumed on the East Coast, providing refined products to more than 50 million Americans. Dependency on the pipeline has risen in recent years, as old refineries on the U.S. East coast have shut down.

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