The ransomware attack on the Colonial Pipeline, which moves more than 100 million gallons of fuel daily from the Gulf Coast to Linden, New Jersey, is a major artery in our energy delivery system — if it is down for an extended period of time, it could have major ramifications for gas prices, as well as the availability of supply.
While there was an initial price spike in gas futures before pulling back on word of steady supply, the clock is ticking.
|USO||UNITED STATES OIL FUND L.P.||48.36||+0.32||+0.67%|
|UGA||UNITED STATES GASOLINE FUND LP PARTNERSHIP UNITS||34.71||+0.55||+1.61%|
East Coast supply is good for about five days. Colonial Pipeline has not at this point offered a restart date. A prolonged shutdown brings us closer to Memorial Day, which marks the start of the key summer driving season.
Prices at the pump are currently averaging $2.96 per barrel, according to AAA.
"It's an all-hands-on-deck effort right now," said U.S. Commerce Secretary Gina Raimondo Sunday on CBS "Face the Nation," noting President Biden had been briefed on the situation.
The White House has created a task force and is considering waiving the Jones Act. That will allow non-U.S. flagged oil and gas tankers to be able to move fuel to the U.S. to help ease supply constraints in New York Harbor.
The Biden administration also lifted oil tanker driver restrictions so they can truck more supply from Texas to the East Coast: it is allowing tanker drivers to drive more hours to move supply to where it is needed.
Another issue is that security for supply will incur higher costs for U.S. consumers as companies spend more money on security. The real threat is the fact that this happened and it could very easily happen again.
This goes beyond just gas and diesel prices, it is a threat that puts lives and the country's security at risk. Our enemies are watching and we need to aggressively address this threat.
Phil Flynn is senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at email@example.com.