The market reaction to the outage of a major fuel pipeline has been muted, but panic buying at retail gasoline stations remains a considerable factor driving price increases, analysts said Tuesday.
The Colonial Pipeline meets about half of the market demand for fuels such as gasoline in the East Coast. The vast network was hit by a ransomware attack on Friday that idled operations — and on Tuesday, the website for the company behind the pipeline was knocked offline by a cyberattack.
Travel club AAA listed a seven cents per gallon increase in the national average retail price for regular unleaded from last week. Another two cents per gallon would bring the national average price per gallon to $2.99, which would be a near seven-year high.
Patrick DeHaan, the senior petroleum analyst at GasBuddy, reported that some states saw gas stations run dry, with Virginia seeing approximately 7.5 percent of its stations without fuel.
“Outages in the southeast U.S. are rising quickly,” he told Zenger News from Chicago. “It’s not a pretty sight.”
The state average price of $2.79 per gallon in Virginia is still only six cents higher than last week.
The federal government last week formed an inter-agency committee to examine the cyberattacks and Secretary of Energy Jennifer Granholm on Tuesday called on retailers to act responsibly.
“We will have no tolerance for price gouging,” she said.
Granholm added that Colonial should restart the majority of its operations by the end of the week.
Tom Kloza, the chief oil market analyst for the Oil Price Information Service, told Zenger from New Jersey there aren’t enough truck drivers to meet the regional surge in demand.
“Traders are calm, but we are seeing panic at retail sites that rely on inland supply from Colonial Pipeline,” he said.
The pipeline carries an estimated 2.5 million barrels of product per day, leaving some regional gas stations scrambling for alternatives.
From New York, Patricia Hemsworth, a senior vice president at Paragon Markets, said she has not seen any panic buying at the wholesale level and agreed that pipeline operations will be back in service by the end of the week.
(Edited by Bryan Wilkes and Alex Willemyns)
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