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‘Panic buying’ is driving the fuel shortage after Colonial Pipeline hack, expert says

The Biden administration says it is trying to mitigate the impact of a cyber attack that disrupted the Colonial Pipeline, which supplies to 45% of the Southeast and is still down five days later. Reports of shortages and rising prices are popping up in states served by the pipeline. Amna Nawaz discusses the aftermath with Tom Kloza, head of energy analysis at the Oil Price Information Service.

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  • Judy Woodruff:

    The Biden administration says that it is trying to help mitigate the impact of fuel shortages and supply issues after a cyberattack disrupted the Colonial Pipeline.

    The pipeline, which supplies to 45 percent of the Southeast, is still shut down five days later.

    We're going to look at this story in two parts tonight, the impact on gasoline and questions about who's behind it.

    Amna Nawaz begins with a look at concerns over supply, demand and prices.

  • Amna Nawaz:

    Judy, a number of gas stations in the South are running out of fuel as drivers rush out to fill up their tanks.

    Videos of long lines and reports of shortages are popping up in states served by the Colonial Pipeline, and prices at the pump are rising a bit as well. Officials, including Governor Kay Ivey of Alabama, are urging consumers to only buy what they need.

    To understand more about what's happening, we turn to Tom Kloza, head of energy analysis at the Oil Price Information Service.

    Tom Kloza, welcome to the "NewsHour."

    Let's start with this Colonial Pipeline.

    Just to set the table, what is the significance of this one pipeline when it comes to fuel supply here in the U.S.?

  • Tom Kloza:

    Well, it is the biggest fuel pipeline, by far, in North America. And it moves product probably about 45 percent of the population essentially from Texas all the way up to New Jersey, and including Tennessee with a spur line. So, it is the major artery to supply gasoline, diesel, and jet fuel.

  • Amna Nawaz:

    So let's get to some of these videos and the reports that people have been seeing, shortages and outages in a number of Southern states, Florida, Georgia, Alabama, South Carolina, North Carolina, Tennessee, and Virginia, where just today the governor declared a state of emergency.

    What is going on here? Are there actual fuel shortages, or is it panic buying?

  • Tom Kloza:

    I would say it is mostly panic buying.

    And I hesitate to use the word shortage, because, usually, that is like yelling fire in a crowded theater. It is a scramble. But there is plenty of gasoline and there's plenty of oil in North America and in the United States. And we have got extra refining capacity, and we're going to be able to import fuel.

    But this is kind of the coalescing of social media and the fear of missing out on gasoline. They say we're going to run out. And you're seeing that behavior. And the crowd is not making necessarily a wise decision.

  • Amna Nawaz:

    Well, Tom, you say there's no real shortage.

    But, at the same time some states have said, we have had a slight 4 or 5 or 6 percent decrease in supply. So what should we understand about that?

  • Tom Kloza:

    Well, we operate on very much a just-in-time inventory situation throughout the country.

    But there were about 26 or 27 days' supply before Colonial shut down. It is vital. It's a vital artery. But the panic buying, in the sense that, oh, it's not going to be around or my station is going to run out, have really, really catalyzed what would have been an annoyance or an inconvenience into sort of a crisis in some places.

  • Amna Nawaz:

    At the same time, a lot of folks are seeing some federal leaders stepping up and paying attention to this. We saw the energy secretary today, the homeland security secretary address this from the White House podium. The EPA issued a fuel waiver, that state of emergency I mentioned from the Virginia governor.

    That sometimes makes people worry more. And they think maybe this is going to be a bigger problem, a prolonged shutdown. What would you say to those folks?

  • Tom Kloza:

    I would say government has acted fairly responsibly so far. And I think this is going to clear up if the pipeline gets going by the weekend, as they have indicated.

    The question is the term they expect to be significantly restored by the weekend. Well, is that by Sunday? Is it by Friday? And restoration, is that 80 percent, 50 or 60 percent? So that uncertainty is — has hurt.

  • Amna Nawaz:

    Tom, what about the impact on gas prices? What are we seeing there?

  • Tom Kloza:

    You know, this is not much of a gasoline pricing event. On Sunday night, the markets opened up about 6 cents higher in gasoline futures, but they have moved sideways since then.

    And when you mentioned state — states of emergency, it becomes very difficult to raise gasoline prices when you have a state of emergency in various areas. You have to prove that your wholesale price has gone up.

  • Amna Nawaz:

    Tom, very briefly, if you had a message for consumers out there who see the videos of long lines, are worried that they may not get the fuel they need, what would you say?

  • Tom Kloza:

    Well, I have already failed in this message.

    I wanted to be the gasoline whisperer and tell people to stay calm, be patient. But it was a little bit like telling people to do that when they thought there were going to be toilet paper shortages last winter. And people have this fear, and they see the crowd behavior. And they say, well, if everybody else is buying it, I better buy some for me.

    And that has really, really snowballed in the last 48 hours or so.

  • Amna Nawaz:

    We hope that people will listen today.

    That is Tom Kloza of the Oil Price Information Service joining us tonight.

    Thanks for your time.

  • Tom Kloza:

    Thank you.

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