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Bloomberg Quicktake: Now published this video item, entitled “Cyberattack Knocks Out North America’s Biggest Oil Pipeline for Third Day” – below is their description.
Motorists from New York to Atlanta face a growing threat of fuel shortages and the highest prices in years as a cyberattack that crippled North America’s biggest petroleum pipeline drags into its third day.
Colonial Pipeline has been mum since Sunday, when it said it was still developing a plan for restarting the nation’s largest fuel pipeline — a critical source of supply for the New York region. The conduit that was shut down since late Friday will only be brought back online when it’s “safe to do so, and in full compliance with the approval of all federal regulations.” The Federal Bureau of Investigation said it’s looking into the disruption.
Auto club AAA warned that pump prices may jump to a seven-year high. Emergency shipments of gasoline and diesel from Texas already are on the way to Atlanta and other southeast cities via trucks, and at least one Gulf Coast refinery began trimming output amid expectations that supplies will begin backing up in the nation’s oil-refining nexus.
The national average pump price rose to $2.967 a gallon on Monday, a 2.4% increase from Friday, according to AAA. Gasoline futures that initially surged as much as 4.2% in overnight trading surrendered those gains on Monday.
The attack comes just as the nation’s energy industry is preparing to meet stronger fuel demand from summer travel. Americans are once again commuting to the office and booking flights after a year in lockdown. A prolonged disruption that sends retail prices soaring would further stoke fears of inflation as commodity prices rally worldwide.
Convenience-store chains in places like Atlanta and Savannah, Georgia, have been clamoring for emergency fuel deliveries since Friday afternoon, said Steve Boyd, senior managing director at Houston-based distributor Sun Coast Resources Inc.
Landlocked cities are in more danger of fuel shortages than those with access to water-borne deliveries, and if the pipeline remains down for many more days, he’s anticipating a “massive surge” in orders, Boyd said. Sun Coast, which operates about 900 trucks, has delivered emergency supplies during 75 major storms over the past 15 years, including during hurricanes Harvey and Irma in 2017.
Gasoline for June delivery was 0.5% higher at $2.1376 a gallon at 11:24 a.m. in New York. Futures prices have gained 40% this year, helped by the recovery from the worst effects of the pandemic.
With little to no clarity over when the system will return, traders are seeking vessels to deliver fuel to coastal terminals. Four vessels have been provisionally chartered to send diesel or gasoline from Europe to the U.S. Atlantic Coast, according to Danish oil-product tanker company Torm A/S.
Some tankers are also being secured to temporarily store gasoline along the Gulf Coast in the event of a prolonged shutdown, according to market participants who asked not to be identified because the information isn’t public. Meanwhile, Total SE scaled back activity in a key unit at its Port Arthur, Texas, refinery because of the Colonial shutown, according to a person familiar with operations.
Colonial halted all operations on its system late Friday after suffering a ransomware attack that affected some of its IT systems.
The event is just the latest example of critical infrastructure being targeted by ransomware. Hackers are increasingly attempting to infiltrate essential services such as electric grids and hospitals. The escalating threats prompted the White House to respond last month with a plan to increase security at utilities and their suppliers. Pipelines are a specific concern because of the central role they play in the U.S. economy.
“It’s an all-hands-on-deck effort right now,” said U.S. Commerce Secretary Gina Raimondo. “We are working closely with the company, state and local officials to make sure that they get back up to normal operations as quickly as possible and there aren’t disruptions in supply.”Bloomberg Quicktake: Now YouTube Channel
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