EPA issues fuel waiver to alleviate gas shortages after pipeline hack

Panic buying has caused gas stations from Virginia to Louisiana to begin to run dry after Colonial pipeline shut down

Last modified on Tue 11 May 2021 12.27 EDT

US environmental regulators issued an emergency fuel waiver on Tuesday, to help alleviate any gasoline shortages in mid-atlantic states after the ransomware attack on the Colonial pipeline network.

Panic buying has caused gas stations from Virginia to Louisiana to begin to run dry. One Washington DC-area fuel distributor told Bloomberg shortages were imminent.

“It’s going to be catastrophic,” said John Patrick, chief operating officer of Liberty Petroleum in Chester, Maryland. “Governors should declare a state of emergency and ask people chasing tanker trucks to gas stations to stay home. School buses stay put.”

Average retail gasoline prices touched $3 a gallon, their highest since late 2014, exacerbating fears of broader inflationary pressures on the economy.

The Environmental Protection Agency said its rule waiver, which relaxes some standards usually applied to fuel, would run through 18 May for fuel sold in Washington DC, Maryland, Pennsylvania and Virginia.

On its website, the EPA says waivers “help ensure that an adequate supply of fuel is available, particularly for emergency vehicle needs”.

Seeking to combat gasoline shortages, North Carolina has suspended restrictions on shipments.

The ransomware attack was made public last week. On Friday, Colonial shut its 5,500-mile network, which moves fuels including gasoline, diesel and jet fuel from the Gulf coast to the east, in order to protect its systems. It has restarted some smaller lines.

The FBI said DarkSide, a collective of cybercriminals, was responsible for the attack. A statement purporting to be from DarkSide said it aimed for financial rather than geopolitical gain.

DarkSide appears to have links to countries from the former Soviet Union. At the White House on Monday, Joe Biden said he would ask the Russian president, Vladimir Putin, to take action.

“We have efforts under way with the FBI and DoJ to disrupt and prosecute ransomware criminals,” the US president added.

The attack has also forced Gulf coast refineries to scale back operations due to lack of storage space. Refiners had also booked at least five tankers to store gasoline, according to sources and shipping data.

The tankers, booked by Marathon Petroleum, Valero Energy, Phillips 66 and PBF Energy, can hold around 350,000 tonnes of fuel. Two were booked for up to a month and three were provisional bookings that could be cancelled, according to data and shipbroking sources.

Traders also booked several tankers to ship gasoline and diesel from Europe to the US east coast.

French oil major Total SE and commodities trading houses Vitol and Trafigura each booked 90,000-tonne tankers to ship diesel on the transatlantic route, data showed, a relatively rare route as Europe consumes more diesel than it produces.

Several Gulf coast refiners that rely on Colonial for shipments cut output. Total and Motiva Enterprises cut gasoline production at their refineries in Port Arthur, Texas and Citgo Petroleum pared back at its plant in Lake Charles, Louisiana, sources said.

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