Colonial Pipeline began to slowly restart the nation’s largest fuel pipeline network on Wednesday after a ransomware attack shut the line, triggering fuel shortages and panic buying in the southeastern United States. It will take several days for the 5,500-mile (8,850 km) pipeline to return to normal operations, Colonial said, even as motorists in southeastern states jammed stations seeking fuel. A return to ample supplies could take two weeks, analysts said. Colonial early Thursday said it expected all markets it serves to begin receiving at least some product by midday today.
Colonial Pipeline Co. paid nearly $5 million to Eastern European hackers on Friday, contradicting reports earlier this week that the company had no intention of paying an extortion fee to help restore the country’s largest fuel pipeline, according to two people familiar with the transaction. The company paid the hefty ransom in difficult-to-trace cryptocurrency within hours after the attack, underscoring the immense pressure faced by the Georgia-based operator to get gasoline and jet fuel flowing again to major cities along the Eastern Seaboard, those people said. A third person familiar with the situation said U.S. government officials are aware that Colonial made the payment.
President Joe Biden on Thursday cautioned Americans against the temptation to start “panic buying” fuel in the wake of a ransomware cyberattack on Colonial Pipeline, which has crippled gas delivery systems in southeastern states. Biden also warned fuel providers in the affected states not to gouge customers.
The states hardest hit by gas shortages can expect to see some relief by this weekend with the help of an armada of tank trucks working to move product from terminals to gas stations. Moreover, with the restart of the wider Colonial Pipeline and the various fuel waivers passed by the EPA, fuel should be reaching more remote markets even sooner than expected.
President Biden on Wednesday night signed an executive order aimed at strengthening the government’s defense. The action follows cybersecurity crises including a recent ransomware attack on a major fuel pipeline that has triggered gas shortages. The order does not specifically address critical infrastructure such as oil and gas pipelines, but it directs the Commerce Department to craft cybersecurity standards for companies that sell software services to the government — a move that analysts hope will ripple across the private sector nationally and globally.
The Biden administration temporarily eased century-old U.S. shipping requirements so a single foreign tanker could transport gasoline and jet fuel to the East Coast, where the Colonial Pipeline outage caused tanks to run dry. A temporary waiver has been issued for one, unnamed company under the 101-year-old Jones Act, which stipulates goods transported between U.S. ports be carried on ships built and registered in the U.S. as well as crewed by American workers, Homeland Security Secretary Alejandro Mayorkas said in a statement Thursday. A White House official said Thursday that the exemption applied to one tanker but other waiver requests are under consideration.
Axios’ Generate newsletter provides an interesting look at the Colonial crisis, including an analysis of the White House response and what the federal government – both the administration and legislators – may propose to address cybersecurity and fuel-shortage issues in the future.
Energy and Commerce Committee
Members of the House Energy & Commerce Committee, including Chairman Frank Pallone (D-NJ) and Ranking Member Cathy McMorris Rodgers (R-WA) released a joint statement on Wednesday on the reintroduction of four bipartisan energy bills designed to secure the nation's energy infrastructure.
- The Pipeline and LNG Facility Cybersecurity Preparedness Act, led by Fred Upton (R-MI) and Bobby Rush (D-IL), will strengthen the Department of Energy’s ability to respond to physical and cybersecurity threats to our nation’s pipelines and LNG facilities;
- The Energy Emergency Leadership Act, led by Bobby Rush (D-IL) and Tim Walberg (R-MI), will help elevate energy emergency and cybersecurity responsibilities as a core function for the Department of Energy;
- The Cyber Sense Act and the Enhancing Grid Security through Public-Private Partnerships Act, led by Bob Latta (R-OH) and Jerry McNerney (D-CA), will bolster U.S. electric infrastructure by encouraging coordination between the Department of Energy and electric utilities;
- The Enhancing Grid Security through Public Private Partnerships Act, led by Jerry McNerney (D-CA) and Bob Latta (R-OH), directs the Secretary of Energy, in consultation with States, other Federal agencies, and industry stakeholders, to create and implement a program to enhance the physical and cyber security of electric utilities.
EIA’s This Week in Petroleum
The Energy Information Administration said it would release its newest motor gasoline inventory levels on May 19, reflecting the outage’s impact on regional inventories. Market watchers expect sharp inventory drops from the outage. EIA’s last available inventory report – released May 12 and reflecting data as of May 7 -- showed motor gasoline stocks in the New England and Central Atlantic regions (PADDs 1A and IB) were a combined 40.0 million barrels, 0.4% higher than the five-year (2016–2020) average. Total motor gasoline stocks in the Lower Atlantic region (PADD 1C) were 24.6 million barrels, 6.5% lower than the five-year average. EIA’s next inventory report, will include inventory data through May 14, showing the outage’s impact on regional inventories.