Gas stations in the southeastern United States faced significant outages Wednesday as the Colonial Pipeline shutdown stretched into a sixth day, sparking panic-buying that has exacerbated the supply crunch.
As of 4 pm ET Wednesday, 68% of all gas stations in North Carolina, 45% in Georgia, 49% in Virginia and 45% in South Carolina were without gasoline, according to GasBuddy, an app that tracks fuel demand, prices and outages. That’s substantially higher than early Wednesday morning.
Outages were also reported in Tennessee (18%), Florida (14%), Maryland (13%), and Washington DC (12%)
The supply crunch appears to be much worse in some major metro areas. GasBuddy reported outages Wednesday morning impacting 71% of the stations in metro Charlotte, nearly 60% in Atlanta, 72% in Raleigh and 73% in Pensacola.
But a reprieve is on the way: Colonial Pipeline said Wednesday evening that it has launched the restart of its operations, though operators warned it will take several days for service to return to normal.
“Some markets served by Colonial Pipeline may experience, or continue to experience, intermittent service interruptions during the start-up period,” the company said in a statement.
The Colonial Pipeline will move as much gasoline, diesel and jet fuel “as is safely possible and will continue to do so until markets return to normal,” it said.
Experts, oil executives and government officials pleaded with Americans not to hoard gasoline in the wake of the ransomware attack on the Colonial Pipeline.
“This situation is now being exacerbated by panic buying and hoarding,” Frank Macchiarola, an executive at the American Petroleum Institute, said during a press briefing.
‘Spreading like a bad rash’
US gasoline demand climbed by 14% on Tuesday compared with the week before, according to GasBuddy. At midnight ET on Wednesday, GasBuddy reported that nearly 1,800 gas stations were out of gasoline in Alabama, Georgia, Florida, South Carolina, North Carolina, Maryland and Virginia.
“Demand has been two to four times normal in many markets and the system, even when it isn’t stressed, can’t support that,” Jeff Lenard, vice president of strategic industry initiatives at NACS, the leading trade group for convenience and fuel retailing, said in an email to CNN.
Meanwhile, average prices at the pump climbed above the key psychological milestone of $3 a gallon on Wednesday for the first time in more than six years, according to AAA.
Tom Kloza, global head of energy analysis at the Oil Price Information Service, said fears about a gas shortage are “spreading virally,” with Virginia “ground zero” for the rush to buy fuel. “It’s spreading like a bad rash,” said Kloza.
President Joe Biden struck an optimistic tone about the situation on Wednesday.
“I think you’re gonna hear some good news in the next 24 hours,” regarding the resumption of operations for Colonial Pipeline,” Biden told reporters.
During a White House briefing Tuesday, Energy Secretary Jennifer Granholm strongly urged Americans not to hoard gas. She also called on gas station owners to “act responsibly” and avoid price gouging during the supply crunch.
“The American people can feel assured that this administration is working with the company to get it resumed as soon as possible, Granholm said.
The Colonial Pipeline, which supplies nearly half the gasoline and diesel to the East Coast, set a goal on Monday of “substantially restoring operational service” by week’s end.
Granholm said that Colonial expects to decide by the end of business Wednesday whether to make a full restart. “But even after that decision is made, it will take a few days to ramp up operations,” she said.
Army bases impose fuel limits
Despite the supply shock, energy markets are not overreacting. RBOB gasoline futures ticked modestly higher Wednesday and remain up just slightly from last Friday.
“East Coast gasoline is running scarce, but what is not moving there is building up on the Gulf Coast,” Michael Tran, RBC Capital’s director of global energy strategy, said in an email.
Some cities and military bases have announced restrictions to ease the strain. The city of Charlotte, South Carolina, asked staffers to “limit non-essential travel as a precautionary measure.” Likewise, the city of Raleigh, North Carolina, asked its staff to limit travel and drive only to perform “mission critical duties.”
Three Army bases in Virginia, Georgia and North Carolina are limiting on-base gas purchases to 10 gallons.
Lenard, the trade group executive, called out images on social media showing customers filling up not just their vehicles but any container available.
“Not only does that take away fuel from those who need it,” Lenard said, “it also creates concern over transport and storage -— wherever they are going. Just because you have something with a lid doesn’t mean you need to fill it with fuel.”
In another sign of panic-buying, the US Consumer Product Safety Commission sent out a tweet saying: “Do not fill plastic bags with gasoline.”
Industry leaders call for waiver of Jones Act
During a press call organized by the API, oil executives called on Biden to consider waiving the Jones Act, which requires ships sailing between US ports to be American flagged and built in the United States.
Susan Grissom, chief industry analyst at the American Fuel & Petrochemical Manufacturers, said that granting temporary Jones Act waivers is “where President Biden’s team can make a big difference.”
“While it may feel like a shortage, the United States isn’t running out of gasoline,” Grissom said.
The problems have been exacerbated by the shortage of truck drivers, oil executives acknowledged.
“This issue is growing exponentially due to the fact we have a driver shortage,” said Ryan Streblow, interim president of the National Tank Truck Carriers. “If we had all the drivers we needed, this would be less of an issue.”
Oil industry executives applauded the Biden administration for taking steps to ease pressure, including by granting an “hours of service” waiver that allow truck drivers transporting fuel to work longer days. The temporary waiver was granted for 18 states.
However, Underwood urged the Biden administration to grant the industry’s request for the hours of service waiver to be granted nationally, not just in some states.
“There is a severe driver shortage in the country,” Underwood said.
‘Not to cause alarm’
Industry leaders pushed back Wednesday on calls to ration fuel.
“Once rationing occurs, more panic buying ensues,” Ryan McNutt, the CEO of the Society of Independent Gasoline Markets of America, said during the press call. “It actually has the opposite effect of what is intended.”
Instead of imposing restrictions, industry executives urged Americans to be reasonable, buy only the amount of fuel needed and refrain from filling up containers with gasoline.
Lenard, the NACS trade group executive, blamed some of the irrational behavior on concern triggered by various governors’ emergency orders to address supply constraints.
“When you hear ‘state of emergency’ it may inspire panic,” Lenard said. “They are meant to repair the system, not to cause alarm.”