© Provided by NBC News There seems to be a light at the end of the tunnel for the stricken Colonial Pipeline, as the company said Monday it expects the outage to be resolved by the end of the week. Oil analysts say drivers in the Southeast, from roughly Alabama to potentially as far north as the nation's capital, could see brief supply disruptions. Exactly where these sporadic shortages could occur are hard to predict, experts say, but they are in agreement about what could make it much worse: panicking.
The Colonial Pipeline, which typically moves 2.5 million barrels of fuel, including gasoline, diesel and jet fuel, has been shut down since Friday, when the company's technology infrastructure was targeted in a ransomware cyberattack.
Massive pipeline may be shut down for days following cyberattack
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Analysts said it's not so much that the problem is the prospect of higher prices at the pump, per se. Gas stations can only charge for gas if they have it in their tanks to sell in the first place. "It's not so much a pricing event even for the affected area - this is going to be a supply event," said Patrick DeHaan, head of petroleum analysis at GasBuddy.com.
"I expect that there will be some sporadic outages, but they will be short-lived as the pipeline restores operations," said Andrew Lipow, president of Lipow Oil Associates. If the Colonial Pipeline shutdown had taken weeks to resolve, he said, governments in the impacted states would have wanted to consider implementing gas rationing, such as setting per-gallon daily limits and restricting fill-ups to alternate days. At the federal level, the government is suspending regulations on an emergency basis (as has sometimes been done in the aftermath of major hurricanes) to make it easier for trucks to ferry fuel to cities squeezed by the shutdown.
Landlocked Southern cities - Atlanta in particular - risk running low on fuel, numerous oil analysts said. Of particular concern is Hartsfield-Jackson Atlanta International Airport: The airport, the primary hub of Delta Air Lines, was the nation's busiest before the pandemic. The sharp curtailment of air travel, particularly business travel, is one silver lining in this case, one expert said.
"Large airport tank farms typically hold four to five days' supply, and with activity - particularly international, which consumes the greatest gallon uplift per flight - still depressed, this is probably closer to six to seven days' supply," said airline industry analyst Robert W. Mann. Restoration of pipeline operation by the end of the week, he said, was "touch and go," but should be soon enough to avoid canceling flights, rerouting passengers and switching out planes - all options carriers likely would have had to explore, Mann said.
It remains to be seen whether restoration of the pipeline will come soon enough to avoid canceling flights, rerouting passengers and switching out planes.
If the outage were projected to drag on for multiple weeks, it could have forced refiners along the Gulf Coast to throttle production because they would have no place to pump the refined product. "If the pipeline doesn't restart, refiners have to reduce their operation because they're going to run out of storage space," Lipow said.
DeHaan said any event that would slow down refining capacity heading into the summer driving season would be bad news. "Ahead of Memorial Day, to have a refinery partially shut down, that's not a great outcome," he said. "There's going to be some ripple effects just contingent on how long this continues."
The worst response from the American public, industry professionals say, would be hoarding gasoline, which could squeeze supply even more in the short term and would distort consumption behavior in a way that could elicit unintended consequences. "This is definitely a bad situation. Price will be impacted, but it won't be anything like the number of likely outages we could see, especially if motorists panic and hoard," DeHaan said.
"If panic buying kicks in, prices could rise further well over the $3 level, but until the pipeline operator can say the line is up and running, the backlog will build and concern will remain," said John Hall, chairman of London-based Alfa Energy Group.
There are other ways to get fuel to areas where supply could be at risk, but they are slower, more fragmented and pricier. "There's a lot of moving pieces, logistically," DeHaan said. Cities with port access like Savannah or Charleston might be able to receive fuel via tanker vessel, and a smaller pipeline, the Plantation Pipeline, could make up some of the shortfall, but with a capacity of less than a third of the hobbled Colonial Pipeline, it would be "a trickle," DeHaan said.
"Shortages... are already starting to happen," he said, noting that the GasBuddy app just activated a feature - more typically used after natural disasters - that lets drivers see at a glance which gas stations have fuel.
"The more hoarding happens, the longer this event impacts supply," DeHaan said. "Hoarding is going to drastically strain the system... because there's no intermediate breathing room."