Fuel markets to gain volatility after cyber strikes close the U.S. pipeline

Due to volatility in U.S. gasoline and diesel prices, markets were closed on Sunday as the country’s largest fuel pipeline closed after a cyberattack.

It was the Colonial Pipeline that carries 45 percent of the fuel consumed on the east coast of the United States taken offline on Friday, limiting the movement of gasoline, diesel and aircraft fuel from Gulf Coast refineries to markets such as Atlanta, Washington and New York.

When the United States removes the coronavirus restrictions, more travel begins and before the U.S. driving season, in the months with the highest demand in the country.

“We are realizing that the severity is worse than we expected,” said Patrick De Haan, head of data analysis for data provider GasBuddy.

De Haan said he expected a “small impact” when e-commerce resumed on Sunday evening, with prices rising by a few cents. Failure to open the pipeline quickly could have a serious impact on prices in the coming days.

“There’s still a little breathing space, we’re just getting started. But on Monday, Tuesday, if there’s no news, you know we’re dealing with something that’s pretty significant. ”

The pipeline is the nation’s largest pipeline for refined products, spanning more than 5,500 miles from Pasadena, Texas to Linden, New Jersey and the port of New York, with a capacity of 2.5m per barrel per day, which is nearly 15% of total U.S. demand. It offers some of the main transportation in the country, including the country’s busiest airport, Hartsfield-Jackson in Atlanta.

In areas where the gas station serves pipelines, it rose about 4 percent on Saturday from a week earlier, according to GasBuddy, which indicated a level of panic buying while consumers worried about the potential for long-term disruption.

The blackout could lead to another rise in U.S. oil imports, revealing the country’s energy vulnerability despite a decade-long rise in domestic and gas production.

“The basic case is that it fixes quickly, but U.S. gasoline and diesel prices will have to rise dramatically to get enough imports from Europe,” said Robert Campbell, head of energy product research at Energy Aspects.

The federal government may temporarily waive the Jones Act, which prohibits the shipment of goods between U.S. ports between non-US-flagged vessels, allowing that fuel to be transported from the U.S. Gulf to the east coast, analysts said. Rules that require the inclusion of biofuels in gasoline could be temporarily removed to make it easier to produce more gasoline if a shortage arose, Campbell said.

The refineries used by U.S. Gulf Coast gas stations to ship products eastward would be forced to reduce fuel production, he said.

Large pipelines are increasingly automated to control flows and pressure, and to control the supply sets of petroleum products, increasing the disruptions that a computer hack can cause.

“This is certainly not the bullying of school students. It’s a highly sophisticated attack on some critical infrastructure,” Campbell said.

The attack comes amid growing concerns about America’s critical cybersecurity vulnerabilities last year SolarWinds attack.

President Joe Biden was informed of the situation over the weekend, and the White House said the federal government was “actively working to assess the effects of this incident, prevent supply disruptions and help the company restore pipeline operations as soon as possible.”

The attack happened as the White House president was preparing another round of negotiations with lawmakers over the $ 2.3 million infrastructure package.

Biden and Democrats said unprecedented levels of federal spending are needed from broadband access to subsidized nurseries to help drive and sustain economic recovery. But Republicans have pushed for a lower bill for conventional infrastructure projects such as roads, bridges and tunnels.

Adam Kinzinger, a Republican congressman in Illinois, said Sunday that the attack on the Colonial Pipe underscored the importance of investing in critical infrastructure and energy projects.

“This should redouble our efforts as a country to overcome our internal divisions… And focus on things like critical infrastructure in the future,” he told CBS News. “Because this will continue to happen more often, unless you’re careful.”