Scheduling and inventory systems remained offline as operators resumed physical service after nearly a week of outages across the 5,500-mile (8,850km) network. The outage left shippers with no way to redirect barrels to southeastern markets drained by panic buying since the 7 May shutdown.
Colonial notified shippers this week that it would not change destinations for barrels as it resumed service. Shippers often use the pipeline’s terminus in the well-supplied New York Harbor market as a default while working out deals for other locations.
But that is not where shippers today want to send fuel. Destinations in the northern Atlantic coast have easier access to global supplies, so prices are lower and have fallen over the past week by 0.5¢/USG to a 71¢/USG discount to June Nymex RBOB. Southeastern US markets, that depend more on the Colonial network, are seeing higher prices. Conventional gasoline in the market south of a major Colonial terminal in Greensboro, North Carolina, climbed by 6.75¢/USG between 6 May and 14 May, narrowing to a 0.75¢/USG discount to June Nymex RBOB.
The last shipping schedule published before the shutdown indicated that most prompt cycle gasoline was only as far north as Atlanta, Georgia, leading shippers to expect that they could move those barrels into the southeast.
A week of pipeline woe
Colonial shut its pipeline network on 7 May to address the ransomware infection. The company began limited service by 10 May and started a full restoration of the physical delivery of fuel on 12 May.
Federal regulators this week eased environmental and transportation regulations to stretch available fuel supplies in the southeast. The region began the week with fairly typical inventories of gasoline and diesel for this time of year. But news of the outage drove panic buying that quickly drained some retail stores faster than available trucks and other resources could resupply.
The White House said earlier this week that the Federal Energy Regulatory Commission (FERC) would “issue orders quickly, should a company shipping product on the pipeline request it, to direct the pipeline to temporarily provide preference or priority in the transportation of product to serve the areas with the greatest need.”
It was not clear today whether any such requests had been made.
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