U.S. declares state of emergency over Colonial pipeline shutdown
Updated 13:31, 10-May-2021

The U.S. government declared a state of emergency on Sunday in response to a ransomware attack that forced Colonial Pipeline to shut a critical fuel network supplying populous eastern states, according to the statement of the U.S. Department of Transportation.

The move lifted various limits on the transport of fuels by road to ease the fallout from the continuing closure of the Colonial pipeline, which carries almost half the fuel consumed on the U.S. East Coast, following a ransomware cyberattack on Friday. 

"This Declaration addresses the emergency conditions creating a need for immediate transportation of gasoline, diesel, jet fuel, and other refined petroleum products and provides necessary relief," the Department of Transportation said. 

The states of Alabama, Arkansas, District of Columbia, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas and Virginia have all been affected.

Colonial Pipeline map /Reuters

Colonial Pipeline map /Reuters

The attack is one of the most disruptive digital ransom schemes reported and has prompted calls from American lawmakers to strengthen the protection of critical U.S. energy infrastructure against hacking attacks.

Commerce Secretary Gina Raimondo said the pipeline fix was a top priority for the Biden administration and Washington was working to avoid more severe fuel supply disruptions by helping Colonial restart its more than 8,850-kilometer pipeline network as quickly as possible. 

The pipeline transports roughly 2.5 million barrels per day of gasoline and other fuels from refiners on the Gulf Coast to consumers in the mid-Atlantic and southeastern states. It also serves some of the country's transport hubs, including its busiest airport, Hartsfield-Jackson in Atlanta. 

U.S. gasoline futures jumped more than 3 percent to $2.217 a gallon, the highest since May 2018, as trading opened for the week and market participants reacted to the closure.

Brent crude was up by 76 cents, or 1.1 percent, at $69.04 a barrel by 0039 GMT Monday, having risen by l.5 percent last week. U.S. West Texas Intermediate futures rose by 70 cents, or 1.1 percent, at $65.60 a barrel, after gaining more than 2 percent last week.

Cybersecurity concerns

Brian Bethune, a professor of applied economics at Boston College, said the impact on consumer prices should be short-lived as long as the shutdown does not last for more than a week or two. "But it is an indication of how vulnerable our infrastructure is to these kinds of cyberattacks," he said.

Colonial Pipeline did not say what was demanded or who made the demand. The company said the ransomware attack Friday affected some of its information technology systems and that the company moved "proactively" to take certain systems offline, halting pipeline operations.

Some smaller lateral lines and delivery points were as of Sunday afternoon, but all the major pipelines remain down, according to the updates on the company's website.

The attack comes after last year's SolarWinds attack, which is considered "the largest and most sophisticated attack the world has ever seen" from a software engineering perspective, according to Microsoft president Brad Smith.

In December 2020, a hacking company breached software made by SolarWinds Corp, giving hackers access to thousands of companies and government offices that used its products. Agencies compromised in the operation include the U.S. Treasury, Justice and Commerce departments and other agencies.

Last year, the average ransom paid in the United States jumped nearly threefold to more than $310,000. The average downtime for victims of ransomware attacks is 21 days, according to the firm Coveware, which helps victims respond.

Read more: The SolarWinds wake-up call

President Joe Biden was briefed on the cyberattack on Saturday morning, the White House said, adding that the government was working to try to help the company restore operations and prevent supply disruptions.

The attack happens amid another round of negotiation between the White House and the legislators on Biden's $2.3 trillion infrastructure package. 

Adam Kinzinger, a Republican congressman from Illinois, said in a CBS interview that the attack on the Colonial pipeline underscored the importance of investing in critical infrastructure and energy projects.

(With input from agencies)

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