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The effect of the Colonial Pipeline shutdown on gasoline prices

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  • Tsvetanov, Tsvetan
  • Slaria, Srishti

Abstract

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.

Suggested Citation

  • Tsvetanov, Tsvetan & Slaria, Srishti, 2021. "The effect of the Colonial Pipeline shutdown on gasoline prices," Economics Letters, Elsevier, vol. 209(C).
    • Handle: RePEc:eee:ecolet:v:209:y:2021:i:c:s0165176521003992
    DOI: 10.1016/j.econlet.2021.110122
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    References listed on IDEAS

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    1. Crosignani, Matteo & Macchiavelli, Marco & Silva, André F., 2023. "Pirates without borders: The propagation of cyberattacks through firms’ supply chains," Journal of Financial Economics, Elsevier, vol. 147(2), pages 432-448.
    2. Shanjun Li & Joshua Linn & Erich Muehlegger, 2014. "Gasoline Taxes and Consumer Behavior," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 302-342, November.
    3. Jonathan E. Hughes & Christopher R. Knittel & Daniel Sperling, 2008. "Evidence of a Shift in the Short-Run Price Elasticity of Gasoline Demand," The Energy Journal, International Association for Energy Economics, vol. 29(1), pages 113-134.
    4. Benjamin Atkinson, 2008. "On Retail Gasoline Pricing Websites: Potential Sample Selection Biases and Their Implications for Empirical Research," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 33(2), pages 161-175, September.
    5. David P. Byrne, 2019. "Gasoline Pricing in the Country and the City," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(2), pages 209-235, September.
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    Cited by:

    1. Zhaoming Yang & Qi Xiang & Yuxuan He & Shiliang Peng & Michael Havbro Faber & Enrico Zio & Lili Zuo & Huai Su & Jinjun Zhang, 2023. "Resilience of Natural Gas Pipeline System: A Review and Outlook," Energies, MDPI, vol. 16(17), pages 1-19, August.
    2. Percia David, Dimitri & Maréchal, Loïc & Lacube, William & Gillard, Sébastien & Tsesmelis, Michael & Maillart, Thomas & Mermoud, Alain, 2023. "Measuring security development in information technologies: A scientometric framework using arXiv e-prints," Technological Forecasting and Social Change, Elsevier, vol. 188(C).

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    More about this item

    Keywords

    Gasoline prices; Supply disruption; Colonial Pipeline;
    All these keywords.

    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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