Last week’s cyberattack on a key fuel distribution network has led to critical shortages, emergency orders, and general panic. WaPo (“Fuel shortages crop up in Southeast, gas prices climb after pipeline hack“) reports:
Lines of panicked drivers overwhelmed gas stations in the Southeast on Tuesday, as rising prices fed fears of shortages in the aftermath of a ransomware attack that forced the nation’s largest fuel pipeline offline.
[…]
In Washington, Energy Secretary Jennifer Granholm said the Southeast can expect a “crunch” that will take several days to alleviate.
“We have gasoline,” she said during a White House briefing. “We just have to get it to the right places. And that’s why I think the next couple of days will be challenging.”
My home state of Virginia is among those feeling the crunch and the governor has issued an emergency order. I needed to fill up on the way to work yesterday morning and my usual gas station was roped off; I attributed this to routine maintenance. Fortunately, I was able to fill up without incident elsewhere.
She said Colonial Pipeline officials had told her that a decision on a “full restart” could come as soon as Wednesday evening.
The Colonial Pipeline system, which moves about 45 percent of the East Coast’s fuel, shut down Friday after hackers thought to be based in the former Soviet Union infiltrated servers and encrypted its data, demanding a fee to restore access. Homeland Security Secretary Alejandro Mayorkas, who was at the White House briefing, said American organizations have lost more than $350 million this year as a result of ransomware attacks.
“The threat is not imminent,” he said. “It is upon us.”
One might question whether it’s wise to have that much control in the hands of a single private entity but it may well be a natural monopoly. Clearly, though, they’re not doing enough to invest in security. (In fairness, they’re likely far more competent in this regard than the Federal government, whose IT is legendarily bad.)
Now consumers are seeing some of the fallout as Colonial pushes to resume service by the end of the week.
As of Tuesday, governors in North Carolina, Georgia and Virginia had declared states of emergency and taken steps to relax fuel transport rules to ease pain at the pump.
More than 7 percent of gas stations in Virginia, 8 percent in North Carolina and 5 percent in Georgia were without fuel late Tuesday afternoon, according to Patrick De Haan, an oil analyst at Gas Buddy. A number of stations in Florida, Alabama and South Carolina also reported dry pumps.
So far, so good. One wouldn’t think a shutdown on Friday would have this drastic an impact this quickly. Rather clearly, most of our service stations are operating on a just-in-time delivery construct. Which is probably quite efficient until it isn’t.
Here’s where logic fails, however:
De Haan said fuel demand in these states spiked 40 percent on Monday, and cautioned against panic-buying, which will only exacerbate the shortages. “It is vital that motorists do not overwhelm the system by filling their tanks,” De Haan said in analysis.
The owner of Masonboro Country Store in Wilmington, Musa Agil, said lines began forming just after 6 a.m. and had not abated all day, blocking the flow of traffic on two-lane Masonboro Loop Road. He spent the day “managing traffic and trying to keep the peace” as some motorists cut lines and others filled up a dozen tanks and jugs.
By 3 p.m. Agil was down to his last 200 gallons and told the packed parking lot that he would soon have to shut down. “Some people are selfish, taking more gas than they need,” he said. “But most people are just scared.”
Granholm said there is “no cause for hoarding gasoline” because the pipeline will be “substantially” back online by the weekend. But local news outlets from Florida to North Carolina reported long lines and dry pumps.
The national average for a gallon of gasoline stood at $2.98 on Tuesday, according to AAA. That’s an 8-cent jump on the week, and a penny shy of prices not seen since November 2014.
Granholm had a warning for service station operators: “We will have no tolerance for price-gouging,” she said, and she urged consumers to inform their state attorney general’s office if they suspect it is taking place.
So, sure, some people are just assholes acting without concern for others. But, for example, I filled up my tank yesterday, having no idea that there was a shortage, simply because it’s just my natural routine. Thankfully, it’s been a long time since I couldn’t afford all 15 gallons at once. And even those people filling up their tank and a bunch of gas cans may well have a legitimate reason for doing so. Maybe they own a lawn service company. Maybe they’re on or about to embark on a long trip they can’t avoid and don’t want to get stranded. Who the hell knows?
And, while I understand the argument against price gouging (it has a disparate impact on the poor) raising prices is the natural and efficient economic response to a supply shortfall. Otherwise, station owners will quickly run out of fuel. That’s bad for them and their employees. But it’s also bad for those who actually need the gas enough to pay an extra 50 cents or dollar a gallon. A temporary price hike will discourage panic buying and hoarding, reallocating the gas to those who need it most.
