Reopening the Colonial Pipeline by the weekend will be key to mitigating summer travel disruptions.
The 5,500-mile pipeline, which is responsible for nearly half of the East Coast’s fuel supply, was attacked by a hacking group causing it to be shut down on Friday. Gas prices are now averaging nearly $3 per gallon and are expected to rise the longer it is shuttered. The company said it aims to return it to normal service by the end of the week, but the longer it is down, the more travel will be hurt. Gas market watchers say that the problem must be addressed by the weekend to prevent major fallout.
“About gas prices … they shoot up like a rocket or like fireworks, and they come back down as slowly as a feather,” John Townsend, manager of public and government affairs for AAA Mid-Atlantic, told the Washington Examiner on Tuesday.
Townsend’s remarks come the same day that AAA released its Memorial Day travel forecast. It predicts a “significant rebound” from last year, with more than 37 million people expected to travel 50 miles or more from home, an increase of 60% from 2020. While robust, the number is still 6 million travelers short of 2019.
OIL AND GAS INDUSTRY RESISTS CYBERSECURITY MANDATES AFTER COLONIAL PIPELINE ATTACK
AAA’s forecast didn’t take into account the possibility that the pipeline blockage continues on for longer than expected, and Townsend said that if that happened, it could create major issues for the travel industry as gas prices inch higher.
“The one thing that could throw a monkey wrench in this is if the pipeline is unsuccessful in getting it back up and running full-steam ahead by this weekend,” he said.
John Rosen, an adjunct economics professor at the University of New Haven, said that the impact on the overall Memorial Day travel season will be “minimal” if the pipeline is fixed by the weekend goal that the company has set.
“That will all change if they’re wrong. If the pipeline is going to be down for months, then it will have huge impacts, but nobody thinks that is going to happen right now,” Rosen told the Washington Examiner. He also pointed out that even if the pipeline is fixed quickly, prices will likely go up around Memorial Day weekend anyway, as they usually do.
Rosen said that given the long amount of time most of the country has been under COVID-19 restrictions and the fact that vaccines are rolling out at a steady pace, it is likely that people are more eager than usual to get out of their homes and travel.
Long lines to get gas and emptied-out stations have grabbed headlines across the Southeast and Mid-Atlantic regions as the wait for the pipeline’s fix continues. In Georgia, Florida, South Carolina, North Carolina, and Virginia, gasoline demand rose more than 40% on Monday, according to GasBuddy analyst Patrick De Haan.
As of Tuesday afternoon, GasBuddy was reporting that 8.5% of gas stations in North Carolina are without gasoline, 7.7% in Virginia, and 5.8% in Georgia. Dustin Carmack, a research fellow in technology policy at the Heritage Foundation, said that a lot of those attention-grabbing lines and outages are due to people rushing out to stock up on gas.
“A lot of that is not so much that the quantity wasn’t there, it’s just the runs that the people are making all of the sudden,” he told the Washington Examiner, adding that it shows the frailty of the market when consumers get “spooked.”
Energy Secretary Jennifer Granholm urged drivers against “hoarding” gasoline on Tuesday. She emphasized that the United States is not facing any form of widespread shortage because of the pipeline issues.
“It’s not that we have a gasoline shortage. We have this supply crunch. Things will be back to normal soon,” she said during a White House press conference.
Carmack pointed out that the company has been working to get gas out and that portions of the pipeline are now being operated manually.
“We can now report that Line 4, which runs from Greensboro, N.C., to Woodbine, Md., is operating under manual control for a limited period of time while existing inventory is available,” the company said in a Tuesday statement.
The Environmental Protection Agency has issued an emergency fuel waiver for the states affected by the Colonial Pipeline shutdown, and the Transportation Department is considering whether to waive the Jones Act temporarily, which would allow non-U.S. maritime vessels to transport oil from Gulf Coast ports to the Atlantic.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Gas prices had been on the rise even before this week’s pipeline problem, with the cost at the pump maintaining a steady upward trajectory since November. One of the biggest factors in the price increase has been the demand for travel hitting historic lows during the worst of the pandemic.
