Spending

Gas prices jump 2.5% after pipeline ransomware attack and are likely to keep rising this summer

"It will be a more expensive summer."

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Twenty/20

Gasoline prices in the U.S. were already climbing steadily before Colonial Pipeline — owner of one of the most important fuel pipelines in the country — fell victim to a ransomware attack on May 7. The cyberhack forced the company to shut down operations for several days, causing shortages that drove up gas prices nationwide.

The average price for a gallon of regular gasoline in the U.S. rose more than 2.3% in the five days following the attack, according to data from AAA. That's more than two and a half times the total percentage increase for the entire month of April.

As of Wednesday, Colonial's pipeline is back up and running, and its supply-chain issues should be ironed out in the next few days. But demand for gas is still high, and it's likely to stay that way. Thanks to Americans' post-vaccination enthusiasm for summer travel, experts say gasoline prices will keep pushing higher through the summer. Here's the latest on the situation, and actions you can take to save money at the pump.

Gas prices were already rising before the cyberhack

The jump in gas prices is a turnaround from last spring, when stay-at-home orders drove petroleum demand, and prices, to record lows. At one point in April 2020, the price of a barrel of crude even fell into negative territory, but those low prices were ultimately short-lived.

As the pandemic wore on, people started driving more, and oil producers adjusted output to stabilize prices. By February of this year, the national average cost of a gallon of regular gasoline had returned to pre-pandemic levels, according to AAA data.

Gas prices are likely to level out somewhat now that the 5,500-mile-long Colonial Pipeline is back online. However, motorists looking to hit the road this summer shouldn't expect much of a reprieve when filling up their tanks, says Devin Gladden, spokesperson for AAA.

"Gas prices were already returning to their pre-pandemic place, and that was because of growing demand for gasoline," says Gladden. "We will also be seeing higher crude prices," which, in combination with the introduction of pricier summer gas blends, means "it will be a more expensive summer."

Fearing shortage, consumers drive demand for gas

While gas prices nationally saw a notable increase, the jump was even more extreme in Southern states along the East Coast, which saw prices increase as much as 11% from May 1 to May 13.

Georgia, Mississippi, the Carolinas, Tennessee, and Virginia — all of which are typically supplied by the affected pipeline — saw gas prices go up 5% or more in the first two weeks of May. Most of that increase happened in the past seven days.

The increase in prices is largely due to a surge in demand, as panicked motorists fearful of a major fuel shortage rushed to gas stations to fill up their tanks. Social media was littered with images of people filling plastic fuel tanks and even sometimes plastic bags.

The panic-buying was reminiscent of the run on toilet paper in the early days of the pandemic.

When Alex Song, a user experience designer at a software company near Raleigh, North Carolina, stopped by his local Costco Tuesday morning, the line of cars waiting to pump gas had wrapped around the parking lot and extended into the street.

"Usually on a weekday morning, there aren't that many people getting gas, and it didn't even occur to me that our area was affected by the pipeline hack," Song says. "So I was surprised when I pulled up to the gas station to see that it looked like, basically, a typical Saturday weekend line of cars."

He decided to skip the line, "but now in retrospect, I should have just waited," he says. The lines got even worse in subsequent days.

As more drivers hit the road this summer, demand is likely to push gas prices even higher

After Colonial Pipeline announced on Wednesday that it had fully restored operations (and paid a $5 million ransom to the hackers), President Joe Biden asked Americans affected by the gas shortages to remain calm. Even with the pipeline back up and running, though, post-pandemic enthusiasm for summer travel will likely drive gas prices higher.

More than a third of Americans are fully vaccinated against Covid-19 and nearly half have received at least one dose of a vaccine. And they're ready for a vacation: More than three-quarters of Americans, 77%, plan to travel this summer, according to a Harris Poll released Thursday.

Gladden says that the increased number of people filling their tanks this week is just a prelude of the swell in demand that is likely coming this summer. "We're expecting to see more than 37 million people" hitting the road in coming months, Gladden says. "That's an increase of 60% from last year."

That sharp increase in demand will likely trigger higher prices, Gladden says.

Plan your trip to keep fuel costs down

You may not have much control over how much a gallon of gas costs, but there are plenty of little things that you can do to make your travels more fuel-efficient, Gladden says. Here are AAA's top recommendations for keeping your gas bill as low as possible this summer:

  • Sideline your gas-guzzler. If you own more than one car, drive the most fuel-efficient model whenever possible.
  • Avoid unnecessary stops. Pack groceries and other necessities to reduce making stops on the way to your destination, and avoid driving during high-traffic times of day. Extra stops and time in traffic can both increase the amount of gas you burn.
  • Minimize your use of air-conditioning. Even at highway speeds, open windows have less of an effect on fuel economy than the engine power required to operate the air-conditioning compressor. In hot weather, park in the shade or use a windshield screen to lessen heat buildup inside the car, reducing the need to blast the air-conditioning when you return.
  • Pack lightly. Remove unnecessary and bulky items from your car, and don't use your roof rack or a special cargo carrier. It takes more fuel to accelerate a heavier car, and the reduction in fuel economy is greater for small cars than larger models. Don't regularly travel with a container of extra fuel in your car, either — in addition to adding weight, it's unsafe.

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