Gasoline prices have spiked as most of a major oil pipeline that carries more than 100 million gallons of fuel from Texas to New Jersey each day remains closed, the American Automobile Association said Monday.
AAA said in a statement that the national gas price average jumped six cents to $2.96 on the week. If prices rise three more cents, the national average would be the highest since November 2014, AAA said.
And AAA said it expects gas prices to continue to climb this week due to the shutdown of Colonial Pipeline, which closed operations Friday after it was hit by a cyberattack.
“This shutdown will have implications on both gasoline supply and prices, but the impact will vary regionally. Areas including Mississippi, Tennessee and the east coast from Georgia into Delaware are most likely to experience limited fuel availability and price increases, as early as this week,” Jeanette McGee, AAA spokesperson, said in a statement.
“These states may see prices increase three to seven cents this week.”
Gasoline futures jumped more than 2 percent in the premarket but traded just 0.3 percent higher after the stock markets opened.
Crude oil futures traded more than 1 percent higher in the premarket, but reversed direction and traded lower early Monday.
Colonial Pipeline says it delivers about 45 percent of the East Coast’s fuel supply. Two sources with knowledge of the federal investigation into the attack told The Associated Press that the criminal enterprise known as DarkSide is behind it.
The company said in a statement issued Sunday evening that some of its smaller lateral lines are operating but its main lines are still shut down. The company has not offered a timeline for when the pipeline could resume full operations again.
But time is of the essence. The longer that the bulk of the pipeline is closed, the more likely prices are to rise severely, analysts say. And it comes just as demand for fuel is surging as the economy reemerges from the COVID-19 pandemic.
Debnil Chowdhury at the research firm IHSMarkit said that if the outage stretches to one to three weeks, gas prices could begin to rise.
“I wouldn’t be surprised, if this ends up being an outage of that magnitude, if we see 15- to 20-cent rise in gas prices over next week or two,” he said.
Colonial is working with the federal government to investigate and respond to the hacking. Commerce Secretary Gina Raimondo said Sunday that an “all-hands-on-deck” effort is underway to restore operations.
“We are working closely with the company, state and local officials to make sure that they get back up to normal operations as quickly as possible and there aren’t disruptions in supply,” Raimondo said.
DarkSide claims that it does not attack hospitals and nursing homes, educational or government targets and that it donates a portion of its take to charity.
It has been active since August and, typical of the most potent ransomware gangs, is known to avoid targeting organizations in former Soviet bloc nations.
Colonial did not say whether it has paid or was negotiating a ransom, and DarkSide neither announced the attack on its dark web site nor responded to an Associated Press reporter’s queries. The lack of acknowledgment usually indicates a victim is either negotiating or has paid.
The Department of Transportation said it would relax hours-of-service regulations for drivers carrying gasoline, diesel, jet fuel and other refined petroleum products, allowing them to work extra or more flexible hours to make up for any fuel shortage related to the pipeline outage. That applies to drivers carrying fuel to 17 states and the District of Columbia.
One of the people close to the Colonial investigation said that the attackers also stole data from the company, presumably for extortion purposes. Sometimes stolen data is more valuable to ransomware criminals than the leverage they gain by crippling a network, because some victims are loath to see sensitive information of theirs dumped online.
With Post wires