Gasoline prices in the United States could reach their highest level since 2014, even faster than expected, as a cyber attack disrupts operations on the country’s largest pipeline.
The national average stood at $ 2.96 a gallon on Friday, according toauto club AAA. With domestic gasoline stocks plentiful, the price at the pump is unlikely to be much higher until Memorial Day at the end of May, which is traditionally considered the start of the summer driving season in the United States. . Gasoline last exceeded the average of $ 3 in October 2014.
Hikes in road fuel prices could spark even more inflation concerns as commodities from petroleum to lumber to corn soar as major world economies emerge from restrictions pandemic. The oil industry was in the process of until responding to what is expected to be an increase in fuel demand as newly vaccinated Americans take to the roads and skies this summer. The dejectedColonial Pipeline is a key artery for gasoline, diesel and jet fuel produced by petroleum refiners on the US Gulf Coast and major metropolitan areas between Atlanta and New York.
“It all depends on the duration of the disturbance. If it lasts longer, it will likely lead to geographic dislocations – shortage of petroleum products on the East Coast, abundance in the Gulf region. This will support New York commodity prices and may attract more petroleum products from overseas, ”said Giovanni Staunovo, commodities analyst at UBS Group AG.
Ransomware Attack Closes America’s Largest Gas Pipeline
To be sure, New York was well supplied with fuel before the attack and could withstand upheaval if missing fuel were replaced or the line restarted quickly. Gasoline inventories on the East Coast at the end of April were near seasonal five-year averages.
The gasoline and crude futures trading starting late Sunday and the cash and cogwheel market on Monday will tell more about the story. The June RBOB contract settled up 0.6% on Friday to over $ 2.12 / gallon.
Colonial operates Line 1 for gasoline and Line 2 for diesel and jet fuel from Pasadena, Texas – less than 15 miles from some of the nation’s largest refineries – to Greensboro, North Carolina, at a rate of 2.5 million barrels per day. They merge at Greensboro to supply a line carrying approximately 900,000 barrels per day to New York Harbor and other East Coast pipelines.
– With the help of Jack Wittels and Alex Longley