The national gasoline average exceeds $ 3 per gallon while the pipeline is shut down

The national average for a gallon of gasoline surged above $ 3 for the first time since 2014 on Wednesday as much of the crucial colonial pipeline remains offline.

Fear of a supply shortage, consumers in southeastern states are going to the pump, creating long lines, and in some cases wiping gas stations dry.

On average, Americans are now paying $ 3.008 for a gallon of gas, down from $ 2.985 on Tuesday and $ 2.927 a week ago.

In some southeastern states, the jump in prices is much greater. Georgians are now paying $ 2.951 a gallon, down from $ 2.715 a week ago. In North Carolina, the average is now $ 2,850, compared to $ 2,689 a week ago. In Virginia, prices have now risen from $ 2.741 to $ 2.871.

The spot bottlenecks in the worst affected countries are increasing. According to the latest GasBuddy data, 15.4% of gas stations in Georgia are dead, while nearly 60% of gas stations in metropolitan Atlanta are empty.

In North Carolina and South Carolina, 24.8% and 13.4% of stations are empty, respectively. In Virginia, 15% of the stations are fuelless.

Patrick De Haan, Head of Petroleum Analysis at GasBuddy, noted that there are only minor failures at the rack level, meaning there is enough fuel but not enough truck drivers to move it.

“It’s been a tough couple of days here,” said David Alexander, president of JT Alexander & Son, a North Carolina gas distributor, on CNBC’s Worldwide Exchange.

On Wednesday morning, he said, about 40% of its locations were running out of fuel after being “madly wiped out” by people standing in line all day. On Tuesday morning, only one of its locations was dry.

“We have to get this thing flowing in the next day or two or we’ll be in a mess,” he said.

Florida, Georgia, Virginia and North Carolina have declared a state of emergency. In order to reduce the supply bottlenecks, the Ministry of Transport waived some restrictions on fuel transport by truck. In addition, Georgia has temporarily suspended its gas tax amid the rise in fuel prices.

A sign warns consumers of the availability of gasoline at a RaceTrac gas station on May 11, 2021 in Smyrna, Georgia.

Elijah Nouvelage | AFP | Getty Images

Alexander said supplies were fine until people got nervous and went to the pump.

“The pipeline has been shut down since Friday. We went through the weekend and everything was fine,” he said. “Panic just creates so much demand that we can’t keep up.”

“Massive Endeavor”

Energy Secretary Jennifer Granholm said Colonial Pipeline is expected to make the decision on whether to resume operations by the end of Wednesday. However, it is likely that it will take a few more days for the pipeline to return to normal.

On Tuesday evening, the company announced that it was making “around the clock” progress in getting the system back online and that some systems were back online. On Monday, the company announced that it is aiming for a full restart by the end of the week.

Once the pipeline, which stretches for 5,500 miles and carries 45% of the east coast’s fuel supply, is back online, operations will not return to normal immediately. On the one hand, the fuel moves through the pipeline at a speed of 8 km / h. Depending on how full it was at the time it was shut down, it will take some time for gas to flow from both ends.

“If they get it going again, everything will work right, it’s a big, huge, massive undertaking,” said Alexander. “They’ve never turned it off before, so they’re sure to have problems here and there.”

Not without options

The pipeline was the target of a ransomware attack last week. Should it stay offline for an extended period of time, there are other ways to transport fuel along the east coast.

Refined gasoline can be imported from Europe, and the Jones Act could also be dispensed with. Officials said Tuesday that there had been no calls to waive the law requiring goods transported between US ports to be carried on US flagged vessels.

Rail and truck deliveries are other possible options.

Meanwhile, officials stressed that consumers should only fill their tanks when needed.

“While there was no reason to hoard toilet paper, for example, at the beginning of the pandemic, there should be no reason to hoard gasoline, especially given the pipeline should be essentially operational by the end of this week and beyond that weekend” said Granholm on Tuesday.

Become a smarter investor with CNBC Pro.
Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.
Sign in to start a free trial today

Comments are closed.