Cyberattack On Colonial Gas Pipeline: DC, VA Prices May Increase

WASHINGTON, DC — A cyberattack prompted a shutdown of a major gasoline pipeline that serves Virginia and the District of Columbia, an incident that could cause shortages and affect fuel prices in the region if the closure continues a couple more days, one expert said.

The Federal Motor Carrier Safety Administration declared an emergency in response to the "unanticipated shutdown" of the Colonial pipeline, which supplies gasoline, diesel, jet fuel and other petroleum products through DC, Virginia and other affected states and territories. The pipeline runs from Texas to New Jersey.

The company says it delivers 45 percent of the fuel used in the East Coast. CNN reported that gas prices could rise over $3 in the Northeast and elsewhere.

AAA said Monday the shutdown of the country's largest pipeline caused the national average for gasoline prices to increase 6 cent per gallon to $2.96. November 2014 was the last time the country saw average gas prices at $2.99 and higher.

"This shutdown will have implications on both gasoline supply and prices, but the impact will vary regionally. Areas including Mississippi, Tennessee and the east coast from Georgia into Delaware are most likely to experience limited fuel availability and price increases, as early as this week,” said Jeanette McGee, AAA spokesperson, in a news release. "These states may see prices increase 3 to 7 cents this week."

One industry expert said the attack will affect gas prices only if the pipeline is shut down for more than five days.

"The challenges brought on by the Colonial Pipeline shut down would likely not appear for several days or longer," said Patrick De Haan, a fuel analyst with GasBuddy. "My guess is they'll be able to restart the pipeline before any major issues develop. This should NOT be a pricing event- but this may be a supply event."

De Haan added, "If it lasts more than five days or so, there would be challenges in some SE states only, but they may not all be even across the affected states."

Once the pipeline restarts, it will take days for normal conditions to occur. It’s difficult to pin the exact amount prices may rise, De Haan said, 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 two to three more days.

The affected states and territories also include Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, and Texas.

According to GasBuddy data, Sunday gasoline demand in Georgia, North Carolina, South Carolina, Tennessee and Virginia was nearly at the same level as Friday, but slightly lower than Saturday. "Some level of abnormal buying is occurring at retail," De Haan tweeted.

NBC News reported that a "Russian criminal group" may be responsible for a ransomware attack that shut down the major U.S. fuel pipeline, two sources familiar with the matter said Sunday. The group, known as DarkSide, has a "sophisticated approach to the business of extortion," the sources said.

Fuel shortages could happen because of the shutdown, federal officials said. An emergency declaration issued last week provides for regulatory relief and assistance in supporting emergency relief efforts to transport gasoline, diesel, jet fuel and other refined petroleum products into Maryland and other affected states.

Colonial Pipeline Co. said it learned it was the victim of a cybersecurity attack and has since determined the incident involved ransomware.

Quickly after learning of the attack, Colonial said it "proactively took certain systems offline to contain the threat."

"These actions temporarily halted all pipeline operations and affected some of our IT systems, which we are actively in the process of restoring," the company said.

"At this time, our primary focus continues to be the safe and efficient restoration of service to our pipeline system, while minimizing disruption to our customers and all those who rely on Colonial Pipeline," the company said. "We appreciate the patience and outpouring of support we have received from others throughout the industry."