Biden says East Coast fuel shortages to end in days as pipeline reopens

By Stephanie Kelly

(Reuters) -U.S. President Joe Biden on Thursday reassured U.S. motorists that fuel supplies should start returning to normal this weekend, even as more filling stations ran out of gasoline across the Southeast nearly a week after a cyber attack on the nation's top fuel pipeline.

The Colonial Pipeline, which carries 100 million gallons per day of gasoline, diesel and jet fuel, will take time to fully recover and could still suffer "hiccups," he said. Colonial began supplying some fuel to most regions along its 5,500 mile (8,850 km) route.

The pipeline resumed computer-controlled pumping late Wednesday after adding safety measures.

Gasoline shortages worsened from Virginia to Florida as depots and distribution centers awaited supply from the pipeline. The shutdown has also forced two refineries to curb output and spurred airlines to reroute flights to refuel at airports outside the impacted area.

The pipeline's restart should bring supplies to some hard-hit areas as soon as Thursday, said U.S. Energy Secretary Jennifer Granholm.

"Relief is coming," added Jeanette McGee, a spokeswoman for motor travel group AAA.

Motorists' tempers frayed as panic buying led stations to run out even where supplies were available. On Thursday about 70% of gas stations in North Carolina were without fuel, while around 50% of stations in Virginia, South Carolina and Georgia had outages, tracking firm GasBuddy said.

The average national gasoline price rose above $3.00 a gallon, the highest since October 2014, the American Automobile Association said, and prices in some areas jumped as much as 11 cents in a day.

Nicole Guy, 36, a leasing agent in Atlanta, was at her fourth gas station Thursday morning, trying to find gas. The station ran out of gas early Wednesday and the manager was not sure when deliveries would resume.

Guy said she wished she had gone out the night before to refuel.

"My sister paid $3.50 at the pump last night for her car," she said. "I thought if I went looking today I'd find a better deal. I never paid that much at the pump."

Even as the pipeline resumes pumping, it will take time to replenish stocks. Gasoline inventories in the Northeast likely will fall to five-year lows this week, said Richard Joswick, an analyst with S&P Global (NYSE:SPGI) Platts.

HACKERS RESURFACE

As FBI cybersleuths dug into an attack that paralyzed a large part of the U.S. energy infrastructure, the group believed to be responsible said it was publishing data from breaches at three other companies, including an Illinois technology firm.

Biden on Thursday said officials do not believe the Russian government was involved in this attack.

"But we do have strong reason to believe that the criminals who did the attack are living in Russia," he said. "That's where it came from."

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U.S. House of Representatives Speaker Nancy Pelosi on Thursday urged companies that are victims of cyberattacks not to pay a ransom.

Colonial has not publicly said how much money the hackers were seeking or whether it paid the ransom. Colonial has a type of insurance that typically covers ransom payments, three people familiar with the matter told Reuters on Thursday.

To stem fuel shortages, four states and federal regulators relaxed fuel driver restrictions to speed deliveries of fresh supplies.

The U.S. also issued a waiver to an undisclosed shipper allowing it to transport gasoline and diesel from the U.S. Gulf Coast to East Coast ports on foreign-flagged vessels. The U.S. restricts deliveries between domestic ports to U.S.-built and crewed vessels.

Gulf Coast refiners that move fuel to market on the Colonial Pipeline had cut processing as an alternative pipeline filled to capacity last weekend. Total SE trimmed gasoline production at its Port Arthur, Texas, refinery and Citgo Petroleum pared back at its Lake Charles, Louisiana, plant.