US average petrol prices jumped above $3 a gallon on Wednesday, the highest level in almost seven years, amid growing fears over fuel shortages as the shutdown of a major pipeline entered its sixth day.
The price increase comes as motorists in states across the US south-east rushed to fill up their tanks, triggering a run on petrol stations despite pleas from federal and state officials not to engage in panic buying.
North Carolina was the worst hit, with a quarter of stations across the state running dry on Wednesday morning, according to data provider GasBuddy. Fifteen per cent of stations in Georgia and Virginia and 13 per cent in South Carolina were also without fuel.
The problems were particularly acute in major urban hubs. Outages hit more than 70 per cent in Charlotte, North Carolina, and 60 per cent in Atlanta, Georgia.
“We have seen a panic on the scale not witnessed since the Iranian crisis of the late 1970s,” said Tom Kloza, global head of energy analysis at Opis, a division of IHS Markit. “Supply to about 12 states has been temporarily compromised, but the widespread outages were hastened by panic behaviour from the maddening crowd.”
The Colonial pipeline was shut on Friday after a ransomware attack, which the FBI said was carried out by a group called DarkSide. The 5,500-mile network delivers petrol, diesel and jet fuel from refineries on the Gulf of Mexico to markets on the US east coast.
The price gyrations will trigger more alarm in the Biden administration, which is seeking to fix a crisis that analysts say is less about actual shortages of supply and more about panic buying.
Average nationwide petrol prices stood at $3.008 a gallon on Wednesday morning, according to the automobile association AAA. Prices in the south-east remained cheaper than many other regions but were rising fast.
Jennifer Granholm, US energy secretary, said on Tuesday that pipeline operators hoped to “be in a position to make a full restart decision” on Wednesday. Ramping up operations would still take “a few days” after that, however.
The administration has also loosened rules on truck loads in some states to ease transportation of fuel to affected areas. It has also temporarily waived some environmental requirements on gasoline quality.
The federal government was also “ready to review any temporary Jones Act waiver requests” from shippers seeking to send fuel between US ports, the White House said on Wednesday. The act otherwise prohibits non-US-flagged vessels from doing so.
Georgia’s governor Brian Kemp on Tuesday issued an executive order suspending the state’s gasoline tax as officials in the region sought to calm drivers’ nerves.
“There is no need to rush to top off your gas tanks or hoard gas — the pipeline is expected to resume operations by the end of the week,” said South Carolina governor Henry McMaster on Twitter.
Gasoline futures have not reacted strongly to the pipeline’s closure, as traders bet on a swift reopening. Contracts for June delivery have risen less than 2 per cent since the closure to about $2.15 a gallon.
“The working assumption is the pipeline is restarting and ramping up by the weekend,” said Robert Campbell, head of oil products research at consultancy Energy Aspects.
“If that happens it is a manageable disruption. If the restart is delayed into next week, we will see cascading refinery run cuts and progressive tightness in fuels markets in the US south-east.”