Following the cyberattack on the East Coast’s Colonial Pipeline by the mysterious hacking group DarkSide on May 7, the flow of gasoline to the East Coast from Texas, Louisiana and the American South has been sharply curtailed. Although experts have agreed that this should not significantly affect the price of gasoline in the long run, and the pipeline has already restored part of its operations, there are indications that stocks of gasoline are already in short supply in some areas.
North Carolina Governor Roy Cooper declared a state of emergency on Monday, May 10, eliminating legal restrictions on transporting oil and gas via executive order. The principal objective of eliminating these regulations was to make the transport of gasoline easier, and therefore to ensure that gasoline could reach more remote parts of the state.
Regrettably, this effort does not seem to have worked everywhere. According to local news outlet OBX Today, a chain of gas stations near North Carolina’s Outer Banks region experienced fuel shortages, long waiting lines, and sometimes shutdowns as gasoline supplies dwindled there.
Much of this jam can be attributed to “panic buying,” or the tendency of consumers to quickly buy goods that are perceived to be in short supply before they run out. Panic buying has been widely criticized by economists as a self-fulfilling prophecy; if enough people think a good is in limited supply, it will soon become so, even if supplies are reliable under normal conditions. One recent example of this behavior was the frenzy surrounding toilet paper in March and April 2020.
Panic buying – effectively a sudden, sharp increase in demand – is often complemented with price gouging, or the tendency of vendors to increase prices in response to high demand and low supply. Although price gouging is prohibited by several statutes in North Carolina, the supply and demand problems persist as long as panic buying continues, with the end result that a manageable supply crisis soon becomes an unmanageable one.
Fortunately, Colonial Pipeline – which early on announced it had no intention of paying DarkSide’s ransom demand – managed to restore a limited flow of oil, and they have announced that they intend to resume full capacity by the end of the week. This suggests that the current shortages will be temporary, and prices should return to normal within a week.
Trevor Filseth is a news reporter and writer for the National Interest.