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Business / Qatar Business

Fuel supplies to become normal in couple of weeks

Published: 16 May 2021 - 09:13 am | Last Updated: 04 Nov 2021 - 11:33 am
Peninsula

The Peninsula

Doha: The long-term direct consequences of the Colonial Pipeline attack will not be very serious. Beyond some mild travel disruption, normal fuel supplies should be resumed within one-two weeks at most, said a report released by The Al Attiyah Foundation.

However, following various less-publicised cyberattacks, this incident should raise the urgency of improving the cyber-security of key energy infrastructure. Vulnerabilities to cyberattacks will likely remain and should be expected to continue to rise, as energy systems become increasingly networked, noted the report. 

A move to renewable energy may diminish some energy security risks, but it will greatly intensify reliance on the electric grid, for electric vehicles, industrial power, building heating and cooling and water desalination, as well as the current major uses for appliances and lighting. 

This will require greater attention to all facets of energy security. The recent winter storms causing a major blackout in Texas, a non-cyber-related disaster, show that greater resilience is required across the whole energy system. For instance, in the case of the US, the outdated Jones Act makes it much harder to move fuel by sea. Most of the US’s Strategic Petroleum Reserve (SPR) is held at the Gulf Coast, while much fuel demand is in the north-east which has only a very small reserve. 

The SPR is also mostly crude, not refined products, which makes it of little use if refineries are shut down by a hurricane or a cyberattack. The fuel shortages in the Colonial incident have been exacerbated (even caused, in states such as Florida) by panic buying, which could have been limited by rationing or other measures.

The growing prevalence of both criminal and state-backed cyberattacks will lead to a greater attention, and spending, on energy companies’ cybersecurity. But it should also merit an overall review of critical infrastructure and greater resilience and back-up to avoid single points of failure and cascading collapses. 

These vulnerabilities should also encourage a general attention to reducing conflicts where possible. In those senses, the Colonial Pipeline episode may turn out to have been a valuable warning - In other words, the episode could be some blessing in disguise by prompting the long overdue wakeup call, said the report.

Petrol prices had jumped 4 percent on May 9 and another 1.5 percent on May 10 in response to the news. By May 13, shortages had begun to multiply, and prices passed $3 per gallon for the first time in six years. Traders had begun booking deliveries from Europe by seaborne tanker.

The temporary spike in prices should be reversed as the pipeline comes back on line. European prices may be dragged upwards slightly because of the diversion of tankers. The fuel demand from the affected area should drop below normal for a few days as users draw down their precautionary stocks. Overall, the incident should cause only a slight hit to demand because of reduced driving, said the report.