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Markets were prepared for volatility in U.S. gasoline and diesel prices on Sunday as the country’s largest gas pipeline remained closed after a cyberattack.
The Colonial Pipeline, which carries 45 percent of the fuel consumed on the east coast of the U.S., was disconnected Friday, restricting the movement of gasoline, diesel and fuel for aircraft from Gulf Coast refineries to markets such as Atlanta, Washington and New York.
The disruption occurs when Americans begin to travel more with the removal of coronavirus restrictions and just before the U.S. driving season, the months of peak demand in the country.
“We realize that its severity is perhaps worse than we expected,” said Patrick De Haan, head of oil analysis at data provider GasBuddy.
De Haan said he expected a “slight impact” when e-commerce resumed on Sunday evening, with prices rising a few cents. But if the pipeline did not reopen quickly, the impact on prices could become more severe in the coming days.
“There is still a small breathing room, we are starting to run out. But on Monday, Tuesday, if there is no news, you already know that we are facing something quite significant ”.
The pipeline is the nation’s largest pipeline for refined products, spanning more than 5,500 miles from Pasadena, Texas to Linden, New Jersey and New York Harbor, with a capacity of 2.5 m barrels per day. , or nearly 15% of total U.S. demand. It serves some of the country’s major transportation hubs, including the country’s busiest airport, Hartsfield-Jackson in Atlanta.
Demand for gasoline in areas served by the pipeline rose about 4% on Saturday from the previous week, according to GasBuddy, which indicates a degree of panic buying as consumers worried about the potential for a prolonged outage. .
The shutdown could trigger another increase in U.S. oil imports, highlighting the country’s energy vulnerability despite a decade of high domestic and gas production.
“The bottom line is that it resolves quickly, but if not, US gasoline and diesel prices will have to rise very significantly to get enough imports from Europe,” said Robert Campbell, head of research at petroleum products from the consultancy Energy Aspects.
The federal government could also temporarily waive the Jones Act, which prohibits non-US-flagged ships from shipping goods between U.S. ports, to allow fuel to be transported from the U.S. Gulf to the east coast. , analysts said. Rules requiring gasoline to include biofuels could also be temporarily lifted to facilitate production of more gasoline if a shortage occurs, Campbell said.
U.S. Gulf Coast refineries that use the pipeline to ship products east would be forced to reduce fuel production, he said.
Large pipelines are increasingly relying on automation to control flows and pressure and control batches of deliveries of petroleum products, increasing the disruption that hacking can cause.
“This is definitely not a school joke. It’s a very sophisticated attack on critical infrastructure, ”Campbell said.
The attack comes amid growing concerns about cybersecurity vulnerabilities in America’s critical infrastructure after last year SolarWinds attack.
President Joe Biden received information about the situation over the weekend and the White House said the federal government “is actively working to assess the implications of this incident, avoid supply disruptions and help the company restore operations.” of pipes as quickly as possible “.
The attack came as the White House was preparing for another round of negotiations with lawmakers over the $ 2.3 million infrastructure package proposed by the president.
Biden and Democrats say unprecedented federal spending levels are needed in everything from broadband access to subsidized daycare to help drive and sustain an economic recovery. But Republicans have pushed for a reduced bill more focused on traditional infrastructure projects, such as roads, bridges and tunnels.
Adam Kinzinger, a Republican congressman from Illinois, said Sunday that the attack on the colonial pipeline underscored the importance of investing in critical infrastructure and energy projects.
“This should redouble our efforts as a country to overcome our internal divisions… And focus on things like critical infrastructure in the future,” he told CBS News. “Because this will continue to happen more often if we are not careful “.
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