The effect of the Colonial Pipeline shutdown on gasoline prices

On May 7, 2021, the Colonial Pipeline system was shut down for 6 days in response to a cyberattack. Using daily regular gasoline price data at the city level and employing a difference-in-differences approach to address potential demand-side confounding factors, we find that the shutdown led to a 4...

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Bibliographic Details
Published in:Economics letters 2021-12, Vol.209, p.110122, Article 110122
Main Authors: Tsvetanov, Tsvetan, Slaria, Srishti
Format: Article
Language:English
Subjects:
Colonial Pipeline
Confounding factors
Gasoline
Gasoline prices
Impact analysis
Pipelines
Prices
Shutdowns
Supply disruption
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Summary:On May 7, 2021, the Colonial Pipeline system was shut down for 6 days in response to a cyberattack. Using daily regular gasoline price data at the city level and employing a difference-in-differences approach to address potential demand-side confounding factors, we find that the shutdown led to a 4 cents-per-gallon increase in average gasoline prices in affected areas, with the estimated impact varying across locations based on their access to alternative means of fuel supply. Although the overall effect was initially slow, it persisted even after the reopening of the pipeline. •We quantify how the Colonial Pipeline shutdown impacted regular gasoline prices.•We find an average increase of 4 cents/gallon in affected areas.•There is heterogeneity in the estimated impact across locations.•Fuel prices took time to respond to the shutdown.•The effect on prices persisted well after the pipeline was reopened.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2021.110122