Largest U.S. gasoline pipeline shut down by ransomware attack, higher pump prices are likely

The nation’s largest gasoline pipeline was forced to shut down temporarily on Friday following a ransomware attack, putting more upward pressure on pump prices heading into a summer driving season that could be marred by shortages.

Officials with Colonial Pipeline, the affected operator that distributes 45 percent of the gasoline, diesel and jet fuel along the East Coast, said in a Friday statement the company “determined that this incident involves ransomware,” adding it “proactively took certain systems offline to contain the threat, which has temporarily halted all pipeline operations, and affected some of our IT systems.”

As of this writing, the company was working to get the pipeline back in operation.

The last time Colonial Pipeline shut down was during Hurricane Harvey, which struck the Texas and Louisiana gulf coasts in August 2017. At the time, gasoline prices in the region rose to a five-year high as diesel prices climbed to four-year highs, NBC News reported.

Cybersecurity firm FireEye’s Mandient incident response team is helping Colonial Pipeline with its investigation of the attack.

The pipeline is the primary fuel artery for the eastern portion of the country, funneling about 2.5 million barrels per day from Houston to a hub in North Carolina. The system sends another 900,000 barrels per day to New York.

Officials said that the attack appears to have come from a ransomware group called Darkside, according to senior threat analyst Allan Liska with the cybersecurity firm Recorded Future, Yahoo News reported.

The report noted that hacking threats have been on the rise in recent months, prompting the Biden administration to develop a plan last month aimed at shoring up cybersecurity for the country’s utility sector and their suppliers. Pipelines are of particular concern because they shuttle energy to nearly all parts of the U.S.

“At this time, our primary focus is the safe and efficient restoration of our service and our efforts to return to normal operation,” Colonial Pipeline officials said Saturday. “This process is already underway, and we are working diligently to address this matter and to minimize disruption to our customers and those who rely on Colonial Pipeline.”

Meanwhile, officials with the U.S. Department of Energy said the agency is “monitoring any potential impacts” to supplies, as the Federal Energy Regulatory Commission added officials there are in “communication with other federal agencies, and we are working closely to monitor developments.”

The cyber attack comes as gasoline prices were already rising in certain regions of the country, including the East Coast.

AAA Mid-Atlantic said Saturday that prices in New Jersey, for instance, hit an average of $3.00 a gallon, up from $1.99 a gallon during the same period a year ago. And the national average is $2.95, or six cents higher from last week.

Traditionally, gasoline and diesel prices rise during the so-called summer driving season, when Americans are doing more traveling for vacations. And as more Americans become vaccinated against COVID, analysts already see an uptick in travel.

What’s more, fuel prices could also get much higher in the months ahead as the nation experiences a significant shortage of truck drivers, the primary method for transporting fuel in the U.S.

“With that increased demand, I think that’s putting an overall sprain on the supply chain,” said Mark Jenkins, a AAA spokesman. “There might not be enough drivers to get that gasoline to the stations.”

Jon Dougherty

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