Overnight Energy & Environment

Overnight Energy: Southeast sees gas shortages amid pipeline shutdown | Feds eye more oversight of pipelines after Colonial attack | Biden administration approves major offshore wind project

by Rachel Frazin 05/11/21 05:55 PM ET

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Today we are looking at fuel shortages related to the Colonial Pipeline shutdown, federal officials eyeing more pipeline security oversight and the Biden administration’s approval of a major wind project.

SHORT AND NOT SO SWEET: Southeast sees gas shortages amid pipeline shutdown

Parts of the southeastern U.S. are seeing gasoline shortages following a cyberattack that shut down Colonial Pipeline.

As of Tuesday afternoon, nearly 8 percent of Virginia gas stations, nearly 9 percent of North Carolina gas stations and nearly 6 percent of Georgia gas stations were without fuel, according to GasBuddy. That’s an increase from earlier in the day.

Gas prices also appeared to be somewhat higher, averaging almost $2.99 per gallon across the country, according to the American Automobile Association. This is up by about 2 cents from Monday and about 7 cents from a week ago.

It goes beyond cars: Fuel supply shortages from the Colonial Pipeline ransomware attack are hitting airlines at a time when the industry is just beginning to emerge from the coronavirus recession.

The 5,500-mile pipeline services seven airports in the eastern part of the country, prompting some carriers to alter routes as a way to maintain access to jet fuel.

And while Colonial is optimistic that its operations will return to normal later this week, an extended disruption could force airlines to consider passing the added costs along to passengers in the form of higher airfares heading into the summer travel season.

“Fuel purchases typically represent the most significant expenses for commercial airlines,” said Kevin Kennedy, an analyst with IBISWorld, a market research firm. “A prolonged disruption of the fuel supply will undoubtedly affect profitability.”

Read more about the airline impacts here.

How is that whole shutdown thing going, by the way? Colonial Pipeline expects to make a decision on fully resuming operations by the end of Wednesday after it was forced to shut down due to a ransomware attack, Energy Secretary Jennifer Granholm said.

Speaking at Tuesday’s White House press briefing, Granholm noted that one of the pipeline’s major lines had resumed normal operations under manual control.

“I have had several conversations with the CEO of Colonial, who has indicated that by close of business tomorrow, Colonial will be in a position to make the full restart decision, but even after that decision is made, it will take a few days to ramp up operations,” Granholm said. “This pipeline has never been shut down before … it will take a few days to be up and running, but our interagency operation is going to be on it all the way.”

Read more about Granholm’s comments here.

WHAT’S NEXT? Feds eye more oversight of pipelines after Colonial attack

The Biden administration and Capitol Hill are taking a closer look at the security in place for critical oil and gas utilities following the Colonial Pipeline shutdown.

Some officials have indicated that the ransomware attack on a pipeline that provides almost half of the East Coast’s energy may have unfolded as it did due to the relative lack of federal oversight of pipelines compared to other utilities.

Two leaders of the Federal Energy Regulatory Commission (FERC), which regulates oil transportation pipelines, are calling for mandatory security standards for the industry.

WINDING ROAD AHEAD: Biden administration approves major offshore wind project

The Biden administration on Tuesday announced that it has approved construction of what it described as the first large-scale offshore wind project in the country. The Vineyard Wind project, which will consist of up to 84 wind turbines, is expected to be able to produce enough energy to power more than 400,000 homes, the administration said.

The project will be located 12 nautical miles from both Martha’s Vineyard, Mass., and Nantucket, Mass., and is expected to be completed in 2023.