(Editor’s note: adding statement from Pilot Flying J)

A day after Colonial Pipeline said there was light at the end of the tunnel for the line’s closure due to a cyberattack, the impact of the shutdown on the ground is being felt. 

Specifically, there are widespread reports of stations running out of gasoline, along with social media pictures of both lines of cars seeking to buy gasoline and bags covering fuel pumps to drive home the point that they’re out of fuel. 

What can’t be measured is how much those tight supplies are spreading into diesel. 

The gasoline squeeze appears to be fueled not only by a drop in supplies coming into the Southeast from the Gulf Coast, but by a rush of people going to fill up their vehicles upon hearing of the Colonial outage. There are several terms for it. “Panic-buying” is one. “Common sense” might be viewed as  another. A third more technical term is that inventories are being transferred from secondary stocks (the pipeline itself, storage tanks) and are becoming tertiary stocks (in the gas tank).

The reports of shortages on social media were given credence by Secretary of Energy Jennifer Granholm in a White House press briefing. She said the Department of Energy has been in conversation with governors from the states most affected by gasoline shortages and they are “understandably concerned with reports of stations running out of fuel.”

But those reports are overwhelmingly focused on gasoline. The availability of diesel does not appear to be anywhere near as severely impacted.

In an email, Dale Bennett, the president of the Virginia Trucking Association, said he has not received reports of “drivers having difficulty finding fuel on the road.” Separately, in a phone call made to the giant White’s Truck Stop on Interstate 81 in western Virginia, a staff member told FreightWaves when asked about diesel supplies: “So far, so good.”  

But Bennett did say that some of his members who buy diesel in bulk, which is stored at their terminals, are seeing delivery delays. “They are having to wait three days for delivery of fuel rather than the usual same-day delivery for bulk storage to fuel their trucks.”

In an email to FreightWaves, Caitlin Campbell, a media relations specialist with Love’s, said the company’s locations in Georgia, South Carolina, North Carolina, Tennessee and Virginia “are experiencing low levels of diesel and gasoline intermittently.” But it also said it was benefiting from its ownership of Musket, a company specializing in the trading of petroleum products like gasoline and diesel, as well as Gemini, its product-hauling division.

Campbell also said Love’s has not put a limit on the amount of fuel a customer can buy.

Tina Arundel, a spokeswoman for Travel Centers of America (NASDAQ: TA), said in an email to FreightWaves that as of Tuesday afternoon, “we have not experienced any supply disruptions.”

“[TA] moved quickly upon learning of the Colonial Pipeline situation to ensure ample diesel and gas supply at all of our locations across the country,” she said. “Our dedicated team is working closely with our suppliers and other partners, and we are bringing in product from other markets to maintain availability and to help minimize any potential disruptions.”

And at Pilot Flying J, an official statement said much the same thing.

“We are closely monitoring the rapidly deteriorating situation regarding the Colonial Pipeline and are seeing increased demand for gasoline across various markets in the Southeast region,” the company said in a statement provided to FreightWaves. “Due to the unexpected spikes in consumption, there is increased strain on the supply chain and we are working hard to quickly address any temporary shortages. Pilot Company will continue to do everything we can, including bringing in resources and extra drivers from unaffected areas, to meet demand and restore supply where needed at our travel centers.”

That there would be a run on gasoline supplies is not surprising. GasBuddy, a data source on retail gasoline prices and supplies, said its tracking tool at midday showed a roughly 32% increase in East Coast gasoline demand from the prior Monday. He also reported that the number of stations reporting outages of gasoline along the route of the Colonial Pipeline ranged from 0.1% in Tennessee to 7.6% in Virginia. (While Tennessee is not on the main Colonial route, there is a spur that goes up into the state).

What is not clear is whether a station that runs out of gasoline then closes the diesel pumps as well. 

One significant development in the diesel market Tuesday is that the price of ultra low sulfur diesel on the CME commodity exchange rose far more sharply than other benchmark petroleum contracts. ULSD was up 2.51 cents a gallon to $2.0417, an increase of 2.51%. Meanwhile, RBOB gasoline was up just 65 basis points for a gain of 0.3%, while Brent crude was up 23 cents to $68.55 a barrel, up 0.34%.

In the over-the-counter market, the price of ULSD barges for delivery in the next five to seven days rose just a few basis points, to approximately 1.15 cents more than the CME price. That market price is a heavy influencer of wholesale prices for diesel, and the fact that it barely moved Tuesday, after about a 1-cent gain Monday, is a sign that professional traders appear comfortable with Colonial coming back online by the end of the week, as it suggested in a statement Monday.

Granholm said she expects gas stations owners to “act responsible” when it comes to pricing. “We will have no tolerance for price gouging,” she said.

Granholm, in her White House briefing, said Colonial’s management has said that by the end of the business day Wednesday, “Colonial will be in a position to make a full restart decision.”

But she cautioned that even if such a decision is made to resume operations, “it will take a few days to ramp up operations.” She said a full shutdown of the line had never been implemented before.

The Department of Transportation took other steps Tuesday to alleviate a gasoline shortage, but their impact on diesel supplies is less direct. For example, it granted a waiver to several Atlantic Coast states that are required to consume reformulated gasoline, a cleaner but more complex fuel. The waiver allows those states to burn non-reformulated gasoline. It does not impact diesel. 

It also said it was studying allowing domestic movement of fuel from the Gulf Coast to the East Coast using non-Jones Act tankers.

One step that could be adopted in the U.S. would be a waiver of the rule on maximum 15 ppm sulfur in diesel. But supplies of that fuel are not plentiful in the U.S. — as opposed to non-reformulated gasoline, which is consumed in large swaths of the country — and allowing high sulfur diesel would probably need imports from other parts of the world that would likely arrive well after the Colonial line comes back to life.

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