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Colonial Pipeline slowly emerges from shutdown, but fuel pinch lingers

A tanker driver delivers 9.000 gallons of fuel to a gas station in Raleigh, N.C., Thursday.
A tanker driver delivers 9.000 gallons of fuel to a gas station in Raleigh, N.C., Thursday.Travis Long/Associated Press

The largest US fuel pipeline was running at less than half capacity Thursday after hackers hit its system nearly a week earlier, with fuel shortages persisting from Florida to Virginia.

Colonial Pipeline Co. resumed shipments Wednesday evening. But flows eastbound near the start of the system, which transports gasoline, diesel. and jet fuel from Gulf Coast refineries as far north as New York, were far from normal.

Earlier, it was reported that the operating company had paid almost $5 million in untraceable cryptocurrency to Eastern European hackers last week to help get gasoline and jet fuel flowing again along the Eastern Seaboard.

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It’s likely to take days to restore full service. Colonial warned that the pipeline may go down again from time to time during the restart process. The company was also resuming operations before its business systems — which coordinate fuel shipments — were back up and running.

In a message to gas station owners, President Biden said Thursday: “Do not — I repeat, do not — try to take advantage of consumers during this time.”

The attack on Colonial occurred just weeks before Memorial Day weekend and the start of the summer driving season, with many Americans expected to eagerly take to the roads and the skies after pandemic-induced lockdowns. Over the past few years, hits by hackers to critical energy infrastructure have become more common. In 2018, a cyberattack brought down a third-party communications system used by several natural gas pipeline operators across the country.

Earlier this week, pump prices surged above $3 a gallon for the first time in six years as motorists raced to fill their tanks. More than half of the stations in Virginia, North Carolina, and South Carolina were still without fuel, according to retail-tracker GasBuddy.

“They don’t tell us when they’re coming, so we don’t know anything,” said Billy Early, a clerk at a Shell station in Asheville, N.C. She said the last delivery the station got, on Tuesday, ran out in four hours.

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Hospitals, railroads, and ambulance services that rely on fuel for generators are the main priority as supply trickles in, said Cheryl Waters, president of Atlanta Fuel Co., which services customers in Georgia, North Carolina, east Alabama, and elsewhere. The company was able to pick up one load Thursday morning.

“We’re just being very careful with who we sell our fuel to,” Waters said. “We’re saving it back for our essential businesses.” She expected it to take 10 to 14 days for her company’s operations to return to normal.

As of Thursday morning, about 20,000 barrels an hour of gasoline and other refined products were flowing east on Colonial’s pipeline out of Baton Rouge, La., according to people who asked not to be identified because the information was commercially sensitive. Throughput starts outside of Houston at 25,000 barrels an hour and slows from there beyond Baton Rouge, the people said.

Amid the constraints, fuel traders were paying each other extra to gain access to the pipeline, the first time that had happened since before the pandemic.

“Don’t panic,” Biden said Thursday. “I know seeing lines at the pumps or gas stations with no gas can be extremely stressful, but this is a temporary situation. Do not get more gas than you need the next few days.” He said the pipeline should reach full capacity soon.

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New York Attorney General Letitia James issued an alert to New Yorkers concerning potential gasoline price gouging and urged consumers to report dramatic price increases.

The Biden administration earlier this week temporarily waived century-old shipping restrictions to allow one foreign-flagged oceangoing tanker to transport gasoline and jet fuel to the East Coast. The White House also waived some gasoline requirements, empowering 10 states to allow heavier-than-normal truckloads of fuel.

Colonial normally ships 2.5 million barrels (105 million gallons) each day, more than Germany’s entire oil consumption. This isn’t the first time Colonial has been forced to shut down. In 2016, an explosion kept the system offline for days, raising gasoline prices and forcing the New York Harbor market to become more dependent on fuel from overseas.

The FBI said the attack on Colonial involved ransomware created by a crime group called DarkSide. Biden said Russia has “some responsibility” to address the attack but stopped short of blaming the Kremlin, saying “there’s evidence” the hackers or the software they used are “in Russia.”