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Impact of Colonial pipeline shutdown could be felt in New England, but questions remain

Pipeline owner said Monday that it hopes to have service restored by the end of the week

A 2008 photo showed oil storage tanks owned by the Colonial Pipeline Co. in Linden, N.J.
A 2008 photo showed oil storage tanks owned by the Colonial Pipeline Co. in Linden, N.J.Mark Lennihan/Associated Press

The northern endpoint of the Colonial pipeline system is more than 200 miles away from Boston. But the fuel pipeline’s abrupt shutdown could still be felt here in Massachusetts in the coming days if it causes gas prices to climb.

The Colonial remains a big conduit for petroleum products to New England from the Gulf Coast. Some of the gasoline and diesel supplies that arrive via pipeline in New Jersey get shipped this way by barge, into Boston Harbor and other New England ports.

However, the Energy Information Administration said in a 2016 report that just over half of the petroleum products that arrive in New England ports are foreign imports, mostly from Canada, primarily through Irving Oil’s refinery in St. John, New Brunswick. Gasoline also arrives in the region from the west, via rail and truck, mainly from Albany. The report said New England’s biggest supply vulnerability is the region’s dependence on its ports; disruptions to those operations, such as from severe storms or extensive ice accumulation, pose the greatest threat to the region’s fuel logistics.

The Massachusetts Department of Energy Resources does not have specific figures for how much gasoline comes to Massachusetts, or to the Boston ports in particular, but did say on Monday that the state gets most of its transportation fuels from the Port of New York and New Jersey via barge. (The Colonial system is a major supplier to the New Jersey refineries, but not the only one.)

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On Monday afternoon, Colonial Pipeline Co. issued a statement saying it aims to substantially restore service by the end of the week, potentially minimizing any price impacts. It has already resumed service on some of its lateral lines.

The cyberattack last week that caused most of the Colonial system, which stretches from Texas to New Jersey, to shut down could affect New England consumers and businesses by driving up the overall market prices for gasoline in the United States — much like the way a strong hurricane in the Gulf of Mexico that shuts down refineries can cause prices to go up here. However, gas prices typically move upward at this time of year anyway, as a seasonal increase in driving causes demand to pick up. How much of an impact the shutdown will have on prices depends highly on how long the shutdown lasts.

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AAA reported on Monday that the average national retail gasoline price jumped 6 cents a gallon to $2.96 in the past week. A few more pennies, and the national average could be the highest it has been since November 2014. AAA said it is forecasting gas prices to climb this week in reaction to the shutdown of the Colonial system, which normally carries about 100 million gallons a day, or 45 percent of the petroleum-based fuels used on the East Coast.

In reaction to the shutdown, the Department of Transportation waived hours-of-service restrictions for truckers who carry fuel in 17 states and the District of Columbia — including New York and New Jersey, but not any in New England. Colonial said this move should help alleviate any local supply disruptions.

Joseph Petrowski, a former Gulf and Cumberland Farms chief executive, said about one-third of New England’s transportation fuel supply depends on the Colonial. Most of New England’s transport fuel, he said, comes from the Irving refinery in Nova Scotia and other waterborne imports instead.

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Petrowski, now a senior adviser with gas station owner Brookwood Financial Partners in Beverly, does not expect gas shortages or significant price increases in New England as a result of the shutdown. Gas prices are rising in part because stored crude oil and petroleum products in the United States are at their lowest levels since the COVID-19 pandemic began, and because of demand driven partly by an increase in staycations.

ESAI Energy also downplayed the potential impact on prices: Existing East Coast inventories of gasoline, diesel, and jet fuel should act as a buffer, the Wakefield consultancy said in a report Monday, and it appears likely that the Colonial pipeline will be fully restored in “a matter of days and not weeks.”

But there’s no guarantee: ESAI pointed out that retail gasoline prices rose by 40 cents a gallon on the East Coast within the first week of the last major Colonial outage, after Hurricane Harvey hit the Gulf Coast in August 2017.



Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.