National gasoline average exceeds $ 3 per gallon due to pipeline closure

A man fills gasoline cans with fuel at a Sunoco gas station in Sumter, South Carolina, the United States on Tuesday, May 11, 2021.

Micah Green | Bloomberg | Getty Images

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

Amid fears of a supply shortage, consumers in Southeastern states are heading to the pump, creating long lines and, in some cases, wiping out gas stations.

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

In some southeastern states, the price increase is much larger. Georgians are now paying $ 2.951 a gallon, up from $ 2.715 a week ago. In North Carolina, the average now stands at $ 2,850, down from $ 2,689 a week ago. In Virginia, meanwhile, prices have fallen from $ 2,741 to $ 2,871.

One-off shortages in the most affected states are on the rise. According to the latest data from GasBuddy, 15.4% of gas stations in Georgia are out of stock, while nearly 60% of stations in the metro Atlanta area are empty.

In North Carolina and South Carolina, 24.8% and 13.4%, respectively, of stations are empty. In Virginia, 15% of stations are fuel-free.

Patrick De Haan, head of petroleum analysis at GasBuddy, noted that there are only small breakdowns at the rack level, which means that while there may be enough fuel, there is no there are not enough truck drivers to transport it.

“It’s been a rough day here,” David Alexander, president of JT Alexander & Son, a North Carolina gas distributor, told CNBC’s Worldwide Exchange.

As of Wednesday morning, he said, about 40% of his sites were out of fuel following a “crazy erasure” by people queuing all day. On Tuesday morning, only one of its sites was dry.

“We have to get this thing to sink in the next few days or two or else we’ll be in deep trouble,” he said.

Florida, Georgia, Virginia and North Carolina have declared states of emergency. In an effort to ease supply constraints, the Department of Transportation has lifted some restrictions on the transportation of fuel by truck. Additionally, in the midst of soaring fuel prices, Georgia temporarily suspended its gasoline tax.

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 supply levels were good until people started to get nervous and head for the pump.

“The pipeline has been closed since Friday. We went through the weekend and everything was fine,” he said. “Panic creates so much demand that we cannot keep up with it.”

“ A massive company ”

Energy Secretary Jennifer Granholm said Colonial Pipeline is expected to make the decision to restart operations by the end of Wednesday. However, it will likely take several more days for the pipeline to return to normal operation.

On Tuesday evening, the company said it was making progress in its “round-the-clock efforts” to get the system back up and running, and that some systems were back on line. On Monday, the company said it is aiming for a full reboot by the end of the week.

But once the pipeline, which spans 5,500 miles and carries 45% of the East Coast’s fuel supply, is back in service, operations won’t immediately return to normal. On the one hand, fuel is flowing through the pipeline at 5 mph, so depending on its fill level at the time of shutdown, it will take time for gas to flow from either end.

“If they bring it back, it’s all working fine, it’s a big, huge, massive business,” Alexander said. “They’ve never shut everything down before, so they’re bound to have problems here and there.”

Not without options

The pipeline was the target of a ransomware attack last week. If it remains 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 lifted. Officials said on Tuesday there had been no calls to waive the law, which requires goods transported between U.S. ports to be on U.S.-flagged ships.

Train and truck deliveries are other potential options.

In the meantime, officials have stressed that consumers should only refill their tanks when necessary.

“While there is no reason, for example, to accumulate toilet paper at the start of the pandemic, there should be no reason to stockpile gasoline, especially since the pipeline is expected to be largely operational by the end of this week and beyond the weekend, ”Granholm said on Tuesday.

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