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Why are gas prices so high right now and when will they go down?

Gas station gas shortage
Posted at 11:50 AM, May 13, 2021
and last updated 2021-05-13 14:50:44-04

After a six-day shutdown, the Colonial Pipeline is running, but high gas prices remain. The average price of a gallon of gasoline in the U.S. has risen above $3 for the first time since 2014.

At this time in 2020, gas prices in the U.S. were at historic lows as demand for fuel plummeted amid the COVID-19 pandemic. Now, with the Memorial Day travel season just weeks away, gas prices have skyrocketed to highs of nearly $7 a gallon in some parts of the country.

So, how did the U.S. get here? And how long will Americans pay these higher gas prices?

Cyberattack causes pipeline shutdown

The crisis started on Friday when the company that operates the Colonial Pipeline says the system went offline.

The company was targeted in a ransomware attack — an attack where hackers make a company’s computer systems inoperable until a ransom is paid.

By targeting the Colonial Pipeline, the hackers had shut down one of the country’s gasoline lifelines, a pipeline that stretches roughly 5,500 miles from Texas to Delaware. It delivers 2.5 million barrels of gasoline, diesel fuel and jet fuel per day to the southeast and up the eastern seaboard — amounting to about 45% of the fuel consumed on the entire East Coast.

For five days, an entire region of the country was cut off from a regular supply of gasoline.

The Biden administration quickly lifted restrictions on trucks hauling gasoline in an effort to increase supply. However, hundreds of gas stations in the southeast went dry, and stations with supply quickly increased their prices.

A criminal group of hackers called DarkSide is believed to behind the attack. Earlier this week, President Biden said the U.S. would “disrupt and prosecute” those responsible.

Panic buying makes the problem worse

By Tuesday, the White House had issued a statement saying that it was monitoring reports of fuel shortages in the Southeast. However, top officials stressed that the country was not yet experiencing widespread disruptions.

However, throughout Tuesday and Wednesday, reports surfaced that many in the Southeast were buying gasoline in bulk with the expectation that the shortage could last for weeks.

Throughout the South, lines formed outside of gas stations that had supply. Social media photos showed drivers filling multiple canisters of gasoline at a time. The Consumer Product Safety Commission even issued a warning to not fill plastic bags with gasoline.

“This is the worst panic buying for gasoline since the Carter Administration,” Tom Kloza the global head of energy analysis at the Oil Price Information Service told USA Today.

During a briefing on Tuesday, Energy Secretary Jennifer Granholm urged Americans to not hoard gas and “act responsibly.” Some gas stations in the South even began imposing limits on purchases.

However, by Thursday, the shortages in some states had grown dire. According to GasBuddy, 71% of gas stations in North Carolina were without fuel, as were 55% of stations in Virginia and 54% of stations in South Carolina.

How long will the shortage last?

The good news is that on Wednesday afternoon, Colonial Pipeline announced that was restarting operations. That means that in states like Texas, Alabama, and Mississippi, supplies could return to normal within a few days.

However, the bad news is that could take a few days for the entire system to get fully back online. According to GasBuddy, that means states further back in the pipeline could experience supply issues for one to two weeks.

In particular, GasBuddy says that Georgia, North Carolina and South Carolina could be in for the longest gasoline shortages.

Unfortunately, the shortages in those states will lead directly into Memorial Day weekend, when gas prices often spike as Americans hit the road for vacations. That means that some portions of the Southeast could be paying inflated prices for gas through the beginning of June.