US Declares State Of Emergency To Keep Gasoline Flowing After Colonial Fails To Restart Hacked Pipeline

by | May 10, 2021 | Conspiracy Fact and Theory, Emergency Preparedness, Experts, Forecasting, Headline News | 14 comments

Do you LOVE America?


    This article was originally published by Tyler Durden at ZeroHedge. 

    Update 9:00 pm ET:  The US government declared a state of emergency late on Sunday, lifting limits on the transport of fuels by road in a bid to keep gas supply lines open as fears of shortages spiked after the continued shutdown of the Colonial Pipeline.

    “This Declaration addresses the emergency conditions creating a need for immediate transportation of gasoline, diesel, jet fuel, and other refined petroleum products and provides necessary relief,” the Department of Transportation said. White House Press Sec Jen Psaki added that “as the Administration works to mitigate potential disruptions to supply as a result of the Colonial Pipeline incident, @USDOT is taking action today to allow flexibility for truckers in 17 states.”

    The move lifted limits on the transport of fuels by road to ease the fallout from the continuing closure of the Colonial pipeline, which carries almost half the fuel consumed on the US East Coast, following a ransomware cyberattack on Friday.

    The decision comes as the government scrambles to deal with the fallout from the closure of Colonial, the biggest refined products pipeline in the US, transporting 2.5m barrels of fuel a day from refineries on the Gulf Coast to markets such as Atlanta, Washington, and New York (see more below).

    If the pipeline is not quickly reopened the impact on prices could become more severe in the coming days, said Patrick De Haan, head of petroleum analysis at data provider GasBuddy. “We’re realizing the gravity of it is maybe worse than what we’d expected,” said De Haan. “There’s still a little breathing room, we’re starting to run low on it. But Monday, Tuesday if there’s no news, you know we’re dealing with something fairly significant.”

    * * *

    Just in case the US didn’t already have a “transitory hyperinflation” problem, gasoline futures soared more than 4% – and are likely to jump much more – late on Sunday after the Colonial Pipeline announced that while some smaller lateral lines between terminals and delivery points are now operational, its mainlines (Lines 1, 2, 3 and 4) remain offline since late Friday after the company suffered a crippling cyberattack that affected its key IT systems.

    Colonial operates Line 1 for gasoline and Line 2 for diesel and jet fuel from Pasadena, Texas, some 15 miles from the nation’s largest refineries, to Greensboro, North Carolina, at a combined 2.5 million barrels a day. They merge at Greensboro to feed a line carrying about 900,000 barrels a day into New York Harbor, and other East Coast pipelines.

    Colonial said that it is “in the process of restoring service to other laterals and will bring our full system back online only when we believe it is safe to do so, and in full compliance with the approval of all federal regulations.” Full statement below:

    Update — Sunday, May 9, 5:10 p.m.

    On May 7, Colonial Pipeline Company learned it was the victim of a cybersecurity attack and has since determined that the incident involved ransomware. Quickly after learning of the attack, Colonial proactively took certain systems offline to contain the threat. These actions temporarily halted all pipeline operations and affected some of our IT systems, which we are actively in the process of restoring.

    Leading, third-party cybersecurity experts were also immediately engaged after discovering the issue and launched an investigation into the nature and scope of this incident. We have remained in contact with law enforcement and other federal agencies, including the Department of Energy who is leading the Federal Government response.

    Maintaining the operational security of our pipeline, in addition to safely bringing our systems back online, remain our highest priorities. Over the past 48 hours, Colonial Pipeline personnel have taken additional precautionary measures to help further monitor and protect the safety and security of its pipeline.

    The Colonial Pipeline operations team is developing a system restart plan. While our mainlines (Lines 1, 2, 3 and 4) remain offline, some smaller lateral lines between terminals and delivery points are now operational. We are in the process of restoring service to other laterals and will bring our full system back online only when we believe it is safe to do so, and in full compliance with the approval of all federal regulations.

    At this time, our primary focus continues to be the safe and efficient restoration of service to our pipeline system, while minimizing disruption to our customers and all those who rely on Colonial Pipeline. We appreciate the patience and outpouring of support we have received from others throughout the industry.

    Meanwhile, downstream customers, which includes pretty much the entire Eastern seaboard, are starting to freak out as they face a new week without the primary source of gasoline supply for hundreds of millions of customers.

    In response to the news, gasoline futures jumped 4% to $2.21 a gallon, approaching the highest since 2014. WTI and Brent both spiked more than 1%, while other products such as diesel and jet fuel are also likely to jump.

    Should Colonial be unable to bring its main pipeline back online, which as a reminder were hacked by a ransomware group called DarkSide, according to Allan Liska, senior threat analyst at cybersecurity firm Recorded Future, there is no telling how high prices will shoot up as Colonial supplies nearly half the east coast gasoline.

    On Friday, the national average stood at $2.96 a gallon Friday, according to auto club AAA, and with national gasoline inventories ample, the pump price wasn’t expected to tick much higher until Memorial Day at the end of May, which is traditionally viewed as the start of the U.S. summer driving season. However, it now appears that we can add gas to the list of items that have seen prices soar. Gasoline last bested the $3 average in October 2014.

    Price increases in road fuel may stoke even more worries about inflation as commodities from oil to lumber to corn skyrocket with the world’s major economies emerging from pandemic restrictions. The oil industry was gearing up to meet what is expected to be a surge in fuel demand as newly vaccinated Americans take to the roadways and skies this summer. The downed Colonial Pipeline is a key artery for gasoline, diesel and jet fuel produced by oil refiners on the U.S. Gulf Coast and major metropolitan areas between Atlanta and New York.

    “It all comes down to the duration of the disruption. If it lasts longer, it’s likely to result in some location dislocations — shortage of oil products in the East Coast, abundance in the Gulf region. That will support New York product prices and might attract more oil products from abroad,” said Giovanni Staunovo, commodity analyst at UBS Group AG.

    One bank that is optimistic on the outcome of the shutdown is Goldman, its commodities strategist Damien Courvalin writing on Sunday that “the Colonial pipeline disruption likely to be brief” while “falling inventories will exacerbate the impact of future potential outages.” Some more details from the note:

    With no physical damage to the pipeline, sufficient PADD1 inventories and above seasonal gasoline imports into the region, only a long outage (likely more than 5 days) would materially tighten local supplies. The Southeast region is most at risk of shortages given tighter inventories in the PADD 1C region.

    As prior Colonial outages have shown, like in 2016, resupply is further likely to be rapid:

    1. the Colonial pipeline was running below capacity so a resumption of flows at capacity would accelerate the restocking,
    2. Kinder Morgan is working to accommodate additional barrels on its PPL line,
    3. vessels from the USGC and EU can arrive in 7 to 14 days, while
    4. the US administration could waive the Jones Act shipping restriction as well as summer gasoline requirements.

    As a result, while NY Harbor petroleum product June cracks and June-July timespreads are set to rally on Sunday’s open/Monday should the pipeline not have been restarted by then, such moves are likely to be short-lived and mean reverting, with the June RBOB contract expiring on May 28.

    Not everyone is so sure, and Bloomberg reports that traders are already seeking vessels to deliver gasoline that would have otherwise been shipped on the Colonial system. Some tankers are being secured to temporarily store gasoline in the U.S. Gulf in the event of a prolonged shutdown, they said.

    There is some good news: the terminus of the pipeline, New York, was well stocked with fuel ahead of the attack and could weather the upset if missing fuel is replaced or the line restarts quickly. East Coast gasoline stockpiles at the end of April were near five-year seasonal averages. Of course, a lenghty shutdown would mean gasoline shortage the likes of which were last seen in the 1970s…

    … which would be poetic justice since price are already soaring at a pace that has surpassed America’s hyperinflationary period, which ended with the Volcker Fed hiking rates to 20% in 1980.

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      1. So it’s a hustle…

      2. Folks that don’t pay attention & don’t know the history of the last century may learn a hard lesson soon – regarding fossil fuels. Snowflakes & others can continue to be on their high horse until they have to revert to the hard scrabble life of the 1700s. Fossil fuels brought a standard of living few humans ever experienced.

        Oh, “it can’t happen here.” Study a little history & look at all the places that said the same thing. Weimar Republic, Zimbabwe, Venezuela, etc.; do they mean anything to you?

      3. Nobody, I mean nobody puts Heinz catch-up on a dog.

      4. I took notice that more and more “emergencies” are occurring. Pipeline closures, trade routes blocked, supply chains broken. More and more of less and less is in the near future.

        One day the FedEx/UPS deliveries just stopped.
        No worries, I’ll just go to the store.
        Then I noticed the stores had all closed.
        No worries. I’ll go straight to the factory.
        But there were no more factories.
        No worries. I’ll just go to the farm.
        But the Uber driver’s battery was dead. He had this message:
        “I just got back from the farm. The farmer wants to know if you have any fuel for his tractor”

        This is the evolution of a country with the reserve currency.

        Agrarian economy =============>
        Industrial economy =============>
        Service economy =============>

        Triffin’s Dilemma posits that a country with the reserve currency must run an ever growing trade deficit in order to supply the rest of the world with it’s currency. This means all gold, then all manufacturing, and eventually the majority of services will be off-shored and the economy will collapse. Finally, the currency will also be rejected.

        • JRS,
          Right on the Mark.

      5. They don’t even suppress alternative energy, anymore, because no one can be bothered to do anything for themselves in this saturated market.

        I have come up with a couple more solutions, on accident, that can be applied to an economy of scale. Except, most people participating in said economy have nothing of value to offer.

      6. Total malarkey, false ‘false flag’ event. Next we learn whodunit (Russia/Iran)… Same MO as all of these uber amateurish ops drawn from the flunky fuktards running the shiteshow. Even if a ‘cyberattack’ took place, how would that shut down anything? These pipelines can very easily be operated manually (without the SCADA Controls being operational) by people on the ground in communication with telephones, and these manual operations are designed into the pipeline and periodically personnel perform “manual operations exercises”. If there is any real problem with the line, it was a “Failure to Deliver” raw product (crude) to the refineries, the refineries failure to deliver to the Head compressor station in Louisiana.

      7. The real issue is, WE ARE OUT OF OIL. Which means the US is out of time. You’ll see very soon, the only entity in this country receiving fuelstuff’s will be military and official gubbmint ops. We don’t have enough fuel left to withdraw our mighty warriors from the 800 or so military bases/outposts around the world (they’ll be abandoned) and wiped out rather quickly. In fact after about two weeks of 0 fuel deliveries to the US population, even the military will be unable to distribute refined fuel to itself with tens of millions of very hungry (and ENRAGED) citizens marauding all over hells half acre looking for HEADS.

      8. Definitely NOT “out of oil” by any measure.
        Will we have declining production eventually?… probably.. but that might be because we gradually move to alternatives.
        Here’s a hint: when we are near “out of oil” the price for what’s left will be insanely higher than $64.46 it trades for in the US tonight.
        The most dangerous situation will be if the production decline comes on faster than alternative technologies. We are definitely not there currently.

        • A nation that uses 20 to 22 million barrels per day, that can only produce (on a good day) 5 million barrels per day (domestically) is out of oil. You’ll find out very soon. On top of that, we import 90% of the chemicals required to operate the refineries (mostly from China of course) no chemicals no refinery operations. We don’t produce the refining chemicals any more, the same way the mighty US doesn’t produce underwear. Hmmm? Superpower?

      9. Former President Trump & former NRG Sect. Rick Perry steered the USA toward NRG independence. That was important because envious bad actors around the world wanted to hurt the USA. Many continue to have that goal & we are vulnerable if we are NOT NRG independent. Does anyone believe the current administration has the same goal? Does anyone believe that all our NRG goals can be met without fossil fuels (Powering trains, semi-trucks, container-ships, etc.)?

        Failing to do your homework (like a snowflake) while in a position of power can be disastrous.

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