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Ransomware attack on pipeline pushes up U.S. gas prices to nearly $3 a gallon

FBI identifies oil pipeline cyberattack hackers
FBI identifies hackers behind oil pipeline cyberattack 02:23

Already rising ahead of the summer travel season, U.S. gasoline prices could soon approach $3 a gallon depending on how long a major pipeline remains out of commission after a ransomware attack. 

"AAA forecasts gas prices to climb this week in reaction to the shutdown," the auto club said on Monday. 

Prices have been edging up before the cyberattack on growing consumer demand and resurgent economic growth. Over the last week, the national average for a regular gallon of gas has risen 6 cents to $2.96, according to AAA. Should that trend continue, an increase of 3 more cents would bring the average to $2.99, making for the priciest gas since November 2014, it said.

"It's very difficult to pin the exact amount prices may rise, but for now, it appears to be a few cents per gallon, possibly growing more significant if the pipeline remains shut down for more than 2-3 more days," travel app GasBuddy stated in a blog post on Monday.

Around the nation, gas prices ranged from a high of $4.10 in California to a low of $2.61 in Mississippi, according to AAA.

Cyberattack shuts down major U.S. fuel pipeline network 02:38

As the shutdown of the country's largest oil fuel line stretched into a third day, The Colonial Pipeline Company announced a "goal of substantially restoring operational service by the end of the week." According to the FBI, a criminal gang known as DarkSide that cultivates a Robin Hood image of stealing from corporations and giving a cut to charity is behind Friday's attack.

"While this situation remains fluid and continues to evolve, the Colonial operations team is executing a plan that involves an incremental process that will facilitate a return to service in a phased approach," the company said in a statement

Colonial links refineries mostly in the Gulf Coast with markets in the southern and eastern U.S., providing refined fuel to more than 50 million Americans, or roughly 45% of all fuel to the East Coast. 

The impact on gas costs is likely to vary by region, with areas including Mississippi, Tennessee and the East Coast from Georgia to Delaware mostly likely to see limited supply and price spikes of 3 to 7 cents as soon as this week, according to Jeanette McGee, an AAA spokesperson. Once the pipeline is back up, "There could still be residual delays as it takes about 15 –18 days for fuel to flow from Texas to New York," McGee added. 

Nationwide, the U.S. has ample gasoline supplies, and the Department of Transportation has already waived trucking rules limiting time behind the wheel to lessen the strain caused by the pipeline's disruption.

Josh Price, an analyst at Height Securities, told investors in a note that the Biden administration would likely waive the Jones Act — a century-old law that requires that ships moving cargo between domestic ports be built in the U.S. and operated by American citizens — if it becomes necessary to ensure adequate gas supplies in East Coast markets. The move would let foreign-flagged vessels move fuel between U.S. ports if the White House determines the shutdown is likely to persist. 

Group with Russian ties suspected in ransomware attack on Colonial Pipeline 03:08

For now, the energy market appears relatively calm and "may even be pricing-in an imminent restoration of service," according to an analysis on Monday by Clear View Energy Partners. 

Motorists were cautioned against panic buying or hoarding gasoline, which could prolong and worsen outages and price increases. "It is true that if the pipeline remains out of service into the early part of next week, roughly Tuesday or so, that some gas stations may run low on gasoline," GasBuddy noted. 

"Avoid filling up! Stay home a few days and make sure there's enough for everyone until the pipeline is back online. Don't ruin the start to summer," tweeted Patrick De Haan, head of petroleum analysis at GasBuddy.

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