Pipeline shutdown has had little impact on supply so far

The Friday closure of the largest oil pipeline between Texas and New York after the Houston-Ransomware attack had little immediate impact on the supply of gasoline, diesel, or jet fuel. However, some energy analysts have warned that a long outage could raise the price of pumps along the East Coast.

Nationally, AAA Motor Club reported that the average price of regular gasoline did not drop from $ 2.96 a gallon from Saturday to Sunday. New York prices are stable at $ 3, and in some southeastern states, such as Georgia, which are considered particularly vulnerable if the pipeline does not resume immediately, prices are 1 gallon. It rose a fraction.

At the beginning of the summer driving season, when petrol prices are traditionally rising, there are no signs that drivers are panicking or gas stations are scooping out customers.

However, some analysts said gasoline shortages could occur if the pipelines operated by the colonial pipeline were still closed during the week.

J. Hatfield, Chief Executive Officer of Infrastructure Capital Management, investing in natural gas and oil pipelines and storage, said:

The closure of the 5,500-mile pipeline, which carries nearly half of the East Coast’s fuel supply, was a nasty sign that the country’s energy infrastructure was vulnerable to criminal groups or cyberattacks from the country.

The Colonial Pipeline admitted on Saturday that it was the victim of a ransomware attack by a criminal group. That is, a hacker can take company data hostage until you pay the ransom. The privately held company did not say whether it paid the ransom. He said he was working to get started as soon as possible.

One of the reasons prices haven’t skyrocketed so far is that the East Coast generally stores enough fuel. And although fuel consumption is increasing, it remains down from pre-pandemic levels.

Nevertheless, the supply system has some vulnerabilities. Southeastern stockpiles are slightly lower than normal during this period. The northeastern refinery’s capacity is limited, and the Northeast Gasoline Reserve, a supply held for emergency interruptions, contains only a total of 1 million barrels of gasoline in New York, Boston, and South Portland, Maine. Not done.

According to a report released Saturday by Washington-based research firm Clearview Energy Partners, this is not enough for average daily local consumption. “It depends a lot on the duration of the outage,” the report said.

New York Harbor spot gasoline prices rise by more than 25% when Hurricane Harvey crippled some refineries on the Gulf Coast in 2017 and stopped the flow of petroleum product colonial pipelines to the northeast for nearly two weeks And it took almost a month to relax.

Regional refineries can increase supply from the Kinder Morgan plantation pipeline, which operates between Louisiana and northern Virginia, but their capacity is limited and major north of Washington, DC. It has not reached the metropolitan area.

The East Coast has ample ports for importing petroleum products from Europe, Canada and South America, but this can take some time. Tankers sailing from the port of Rotterdam in the Netherlands at speeds of up to 14 knots can take up to two weeks to travel to the port of New York.

Tom Croza, global head of energy analysis for oil price information services, said the Biden administration could suspend the Jones Law. This will allow tankers of foreign vessels to move additional fuel barrels from Gulf ports to Atlantic ports. The Jones Law is usually interrupted in emergencies such as hurricanes.

“If the colonial software problem persists, we can argue that the Biden administration may consider such a move sooner rather than later,” Croza said.

Pipeline shutdown has had little impact on supply so far

Source link Pipeline shutdown has had little impact on supply so far

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