Yahoo Finance’s Myles Udland, Julie Hyman, and Brian Sozzi discuss the gas shortages with Robert Sinclair, AAA Northeast Senior Manager of Public Affairs
- Another big story this week is what's been happening with the gasoline pipeline, the Colonial Pipeline cyber attack that has taken down or threatened, we should say, supply to much of the Eastern part of the United States, gas supply to much of the Eastern part of the United States. Saw reports yesterday of gas hoarding breaking out some sections of the Southeast. Unclear whether those are regions that are actually served by the Colonial Pipeline or not. But there are certainly some pressure at the pump these days.
And joining us to talk about just how much we are seeing is Robert Sinclair, Northeast Senior Manager of Public Affairs at AAA. So Robert, let's just start with the data right now as we've seen it in the last couple of days. What have we-- or I guess I should say, have not seen-- to this point, given the public's clear anxiety around whether there will be another gas shortage here in the US?
ROBERT SINCLAIR: Well, it's really unfounded anxiety. There's plenty of gasoline around. And there are provisions being made now so that those areas that might be seeing shortages can be resupplied, usually by truck, with our service regulations being waived and any restrictions on the size and weight of trucks transporting petroleum products being waived.
But really, what we're seeing now, the shortages are being created by panic buying. In the last couple of days, we're seeing in the southeastern states buying patterns that are 200% to 300% higher than normal, so the demand doubling or tripling in a couple of days is what's causing the problems. If buyers would just stop that, we would stop seeing the shortages.
The southeastern states are, indeed, served by the Colonial Pipeline except, really, Florida. Florida-- the only pipeline in Florida is from Tampa to Orlando. Florida is 100% Maritime based. So there's really-- the only reason to have a problem there is because of people buying so much gasoline in such a short period of time.
- Robert, should folks be hoarding gas under the expectation that this goes on longer than officials are suggesting right now?
ROBERT SINCLAIR: No, they shouldn't. They'll be able to be resupplied. Hoarding gasoline, number one, is very dangerous. I saw a picture yesterday of a person that came when it looked like they had a hundred gallon tank on a trailer behind their vehicle to buy gasoline. That's totally uncalled for. There's no need to hoard gasoline. Just proceed as normal. If everyone reverted to normal buying patterns, there would be no shortages right now.
- So Robert, basically what you're saying is, not only are people essentially causing the shortage by going out, rushing out to buy gasoline, they're also pushing prices higher, in theory, by doing this.
ROBERT SINCLAIR: Yeah. Well, we were seeing prices go up for probably the past six or seven weeks as a result of, really, speculation in the market. Demand over the same period of time is actually down roughly 14% compared to 2019, the last, quote unquote, "normal" year. And with the vaccine being very successful and people showing confidence in it and getting ready to travel, speculators in the oil and gasoline market, wholesale gasoline market, have been buying futures and bidding up the price, perhaps artificially.
So you know better than I that these things happen all the time. There's the fear attack, worrying about something happening in the Middle East, that can cause the price of crude oil and gasoline futures to spike. So that was the case beforehand. I think there'll probably be a residual effect of another day or two prices going up resulting from that. And it will be then if the pipeline is not up and running again that we'll begin to see price increases due to those sorts of problems.
And we have to remember, also, that Memorial Day is the beginning of the summer driving season. And our projections show that 37 million people will be traveling over that holiday weekend. 90% of them will be driving. And usually, our projections show, over a holiday period or summer driving season, anywhere from 85% to 95% of people who take a trip are going to drive to their destination. So all that extra demand leads to the price going up.
And then June 1 the Atlantic hurricane season begins. And we've seen before where a major storm hitting the breadbasket of oil and gas infrastructure down in the Gulf Coast can lead to prices spiking overnight.
- All right. Gas hoarding, yet another oddity for our COVID economy. Robert Sinclair-- Robert Sinclair with AAA. Thanks so much for joining the program this morning.
ROBERT SINCLAIR: Good to see you. Thanks for having me.