Gasoline futures jump as much of the vital pipeline remains shut down after a cyberattack
Signage will be displayed on a fence at the Colonial Pipeline Co. Pelham intersection and terminal in Pelham, Alabama, USA on Monday, September 19, 2016.
Luke Sharrett | Bloomberg | Getty Images
Fuel prices rose in stores on Sunday evening as one of the largest pipelines in the US remains closed after a cybersecurity attack.
Gasoline futures rose 2% to $ 2.168 a gallon while heating oil futures rose 1.2% to $ 2.03.
West Texas Intermediate’s crude oil futures, the US oil benchmark, rose 56 cents to $ 65.46 a barrel. The international benchmark for Brent crude was trading at $ 68.95 per barrel, which translates into a gain of 65 cents. The natural gas futures were trading at $ 2.96 per million British thermal units
Colonial Pipeline announced Sunday evening that some of the smaller side lines between terminals and delivery points are back online, but the main lines are still down.
“We are in the process of restoring service to other side panels and will only bring our entire system back online if we believe it is safe and fully comply with all federal regulations,” the company said in a statement.
How quickly service is restored in the pipeline remains the most important factor to watch. While tank farms usually store fuel for a few days, a prolonged outage can lead to an increase in fuel prices.
The Colonial Pipeline, which operates the largest pipeline transporting fuel from the Gulf Coast to the northeast, “suspended all pipeline operations” on Friday evening as a proactive measure following a ransomware cyberattack.
The pipeline is an essential part of the US petroleum infrastructure and transports around 2.5 million barrels of gasoline, diesel fuel, heating oil and jet fuel every day. The pipeline is more than 5,500 miles and carries nearly half of the east coast’s fuel supply. The system also supplies fuel to airports, including in Atlanta and Baltimore.
“Without this there is no transport in the region, so it is important that the pipeline is back on stream as soon as possible,” said Patrick De Haan, Head of Petroleum Analysis at GasBuddy. “The effects will potentially increase exponentially after about day 5,” he added.
President Joe Biden was notified of the pipeline’s closure Saturday morning, and the Department of Homeland Security’s cybersecurity and infrastructure security agency is coordinating with the Colonial Pipeline.
US Secretary of Commerce Gina Raimondo said on Sunday that “everything is on deck at the moment”.
“We are working closely with the company, state and local authorities to ensure that they are back to normal operations as quickly as possible and that there are no disruptions in supply,” she told CBS ‘Face the Nation.
The pipeline failure comes as Americans start traveling again as restrictions are lifted and the rollout of Covid vaccination accelerates. On Friday, the TSA checked more than 1.7 million passengers, the highest figure in more than a year.
“The colonial outage comes at a critical time for the recovering US economy: the start of the summer driving season,” said ClearView Energy Partners. “Persistent disruption that causes pump prices to rise significantly could increase the prospect of domestic policy intervention,” the company added.
The national average for a gallon of gasoline was $ 2,962 on Sunday, up 60% year over year, according to AAA.
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– CNBC’s Emma Newburger contributed to the coverage.