On May 7, 2021, Colonial Pipeline suffers cyber-attack, and the pipeline is shut down. This disrupts a major portion of gasoline and jet fuel deliveries on the east coast. The event is widely broadcast, and panic buying begins.
The pipeline was restarted on May 12, and full operation resumed May 15. On May 18, there were still over 10,000 stations without fuel. Within a few more days, retail sales returned to normal.
This is a good event to study because the entire event was short lived and easy to comprehend. The event only impacted a portion of the country and lasted less than a month from start to finish.
- While the cyber attack resulted in the pipeline being shutdown, it was the announcement of the shutdown that started the buying spree.
- When buyers received the news, they went out and purchased gasoline. Lines began to form at gas stations which fed the panic. Gas stations began to run out of fuel to sell and the panic reached full frenzy.
- The point from the news reaching the public to the first stations running out of fuel took less than 48 hours. The full frenzy and panic set in within 72 hours.
Prior to the event there was nothing wrong with the distribution system in terms of capacity. The tank farms had ample fuel on hand, the tanker truck deliveries to retailers were easily able to meet the daily demand for fuel. The retailers had ample fuel on hand to meet the normal demands for fuel. The capacity of the distribution system was more than adequate to meet the needs in NORMAL conditions. After the event nothing needed to be expanded. Gas stations didn’t install extra tanks and the tank farms were not enlarged. The system is more than adequate to meet the demand when the demand isn’t being driven by emotion.
Panic buying affects you even if YOU are not the one panicking. Panic buying feeds on itself, it becomes self-fulfilling and self-sustaining once it occurs. Panic buying is a hard fire to put out. It is fed by emotion, not logic.
A run on a bank was perfectly portrayed in the movie, “It’s a wonderful life”. When people are driven by emotion, they don’t always act rationally.