Colonial Pipeline ‘will NOT pay ransom to Russian hackers’ as Charlotte orders residents to ‘limit travel’ amid panic buying that has left 65% of N. Carolina gas stations dry: Pressure grows on Biden to act.
Colonial Pipeline reportedly has no plans to pay rumored $5 million-plus ransom to Russian hackers who have paralyzed the key gas pipeline, as pressure mounts on the Biden administration to do more to ease the fuel crisis that is gripping the southern Atlantic seaboard.
North Carolina has been the state hardest-hit by fuel shortages, with 65 percent of all gas stations dry in the state, but motorists across the South were impacted as the crisis entered its sixth day on Wednesday and shortages spread from Baltimore to Florida.
Officials with Colonial Pipeline say they will decide on Wednesday whether it is safe to begin a full restart, which could take days to complete. If the shutdown extends into the weekend, it could create broader fuel disruptions and spike gas prices across the nation ahead of the travel-heavy Memorial Day holiday.
Meanwhile, price gougers in Virginia have been busted charging up to $6.99 per gallon, and police in Charlotte are warning residents to ‘limit non-essential travel’ as more than 70 percent of gas stations in the city run dry.
In metro Atlanta, more than 60 percent of gas stations had no fuel on Wednesday, and the rate exceeded 70 percent in Raleigh, North Carolina and Pensacola, Florida.
The impact of the crisis is rippling across the country, with the national average price of gas exceeding $3 for the first time since 2014, after the Colonial Pipeline was disabled by a Russian ransomware attack on Friday.
‘I think this is something that demands really serious federal attention. This was essentially a cyberattack on critical infrastructure in our country,’ Florida Governor Ron DeSantis, a Republican, said in Jacksonville on Tuesday evening.
‘You can’t just say it’s a private pipeline therefore, we’re not going to be involved. No, the U.S. government needs to be involved. They need to help mitigate this,’ said DeSantis.
‘My fear is you have these gas shortages, it’s going to cause a lot of problems for people, just the convenience of life, but also for our economy,’ he added.
It comes on a day of fast-moving developments in the fuel crisis, with:
- The average national gasoline price rising above $3.00 a gallon on Wednesday, the highest since 2014
- In metro Raleigh, 72% of gas stations running dry, in Charlotte 71%, and in metro Atlanta 60%
- Colonial Pipeline saying it will decide today whether it is safe to resume pipeline operations
- Supply chain bracing for Memorial Day weekend with more than 37 million people to travel at least 50 miles
- Biden administration urging motorists not to deepen the crisis with unnecessary panic buying
- U.S. Energy Secretary saying officials are considering moving supply by train or ship if necessary
- Shortages spreading to the Florida panhandle as well as Washington DC and Baltimore
- States of Emergency in effect in Florida, Georgia, North Carolina, and Virginia
The Biden administration insists that it is taking steps to address the crisis, by relaxing regulations on trucking to help resupply dry stations and considering suspending rules that mandate American ships be used for transfers between U.S. ports.
‘There is a lot that is involved in getting a pipeline up and running,’ Transportation Secretary Pete Buttigieg said at the daily White House briefing on Wednesday. ‘We’re not wasting any time, and haven’t been since even over the weekend, in taking the steps that are needed to mitigate any shortages.’
Buttigieg also urged against ‘hoarding’ gas and issued an extraordinary warning to desperate motorists, saying ‘Under no circumstances should gasoline ever be put into a plastic bag.’
The White House also said top officials were considering new ways to alleviate the shortages, following a raft of waivers easing quality standards for gasoline and extending working hours for fuel truckers to boost shipments.
‘Our top priority right now is getting the fuel the communities that need it, and we will continue doing everything that we can to meet that goal in the coming days,’ Buttigieg told reporters at the White House.
The U.S. Consumer Product Safety Commission echoed his dire warning in a tweet: ‘Do not fill plastic bags with gasoline.’
Rather than pay off ransom demands of the criminal hacker gang DarkSide, Colonial plans to work with cybersecurity firm Mandiant to restore the data from backup systems where possible and rebuild systems where backups are unavailable, two people familiar with the matter told the Washington Post.
DarkSide ransom demands can range from $500,000 to more than $5 million, according to Mandiant.
‘If the reports are correct and Colonial has indeed refused to pay, it did the right thing,’ Brett Callow, a threat analyst with Emsisoft, told DailyMail.com.
‘Ransomware attacks happen for one reason and one reason only: they make money. If the criminals were to find that attacks on critical infrastructure were profitable, there’d be more attacks on critical infrastructure. It’s a simple as that,’ he added.
Meanwhile, fights are breaking out at the gas pump in some places. Motorists in Knightdale, North Carolina, on the outskirts of Raleigh, traded blows on Tuesday as frustrations boiled over in a long line for gas at a Marathon station.
A witness said a woman tried to cut the line for gas, and then screamed obscenities and spit on a man who refused to let her cut in. The man jumped out of his vehicle, spit on the woman in return, and began grappling with her, video shows. No arrests could be confirmed in the incident.
The gas station chain Parker’s, which serves Georgia and South Carolina, announced on Facebook that customers would be limited to $50 worth of gas as a rationing measure.
Officials at Colonial will decide on Wednesday whether it is safe to resume operations, and Biden administration officials have privately admonished the pipeline operator for its weak security protocols and lack of preparation, according to CNN.
The fuel crunch comes as a double-whammy to U.S. consumers, as new data on Wednesday showed inflation hitting its highest level in 12 years in April.
With nearly 70 percent of all retail goods distributed by truck, the fuel crisis is also threatening supply chains across the impacted region.
In metro Atlanta, nearly 60 percent of all gas stations are dry, 71 percent of stations in Charlotte are offline, and across the state of North Carolina two thirds of all stations have no gas, said GasBuddy analyst Patrick De Haan on Wednesday.
The ransomware attack on the Colonial Pipeline last week halted 2.5 million barrels per day of fuel shipments in the most disruptive cyberattack on U.S. energy infrastructure ever.
The FBI has confirmed that the DarkSide ransomware group is behind the attack, and the criminal gang is believed to be based in Eastern Europe or Russia and operate with the tacit approval of the Russian government.
A cybersecurity source tells DailyMail.com that the group scans targets and does not attack them if their systems use the Russian language.
Russia’s Embassy in the United States rejected speculation that Moscow was behind the attack. President Joe Biden stopped short of blaming the Russian government for the attack, but said there was evidence the hackers were based in Russia.
It is unknown how much money the hackers are seeking, and Colonial has not commented on whether it would pay off the criminal gang.
The Colonial Pipeline stretches 5,500 miles from U.S. Gulf Coast oil refineries to consumers in Mid-Atlantic and Southeast states.
The pipeline’s private operator manually opened portions of the line to release some needed supplies in Georgia, Maryland, New Jersey and the Carolinas. It has accepted 2 million barrels of fuel to begin a restart that would ‘substantially’ restore operation by week’s end, the company said.
The supply crunch, amid panic buying by motorists, has brought long lines and high prices at gas stations ahead of the Memorial Day holiday weekend at the end of this month, which traditionally marks the start of the peak summer driving season.
The AAA expects more than 37 million people to travel at least 50 miles from home during the Memorial Day weekend, up 60 percent from last year, which was the lowest since AAA began keeping records in 2000.
De Haan, the GasBuddy analyst, said on Wednesday morning that there were only slight fuel shortages at the wholesale level, suggesting that the main issue was finding enough trucks to distribute gasoline to stations.
He said that nearly 1,800 gas stations were out of fuel across Alabama, Georgia, Florida, the Carolinas, Maryland and Virginia.
‘A lot of that is because they’re selling three or four times as much gasoline that they normally sell in a given day, because people do panic. It becomes a self-fulfilling prophecy,’ said S&P analyst Tom Kloza.
The pipeline runs from the Texas Gulf Coast to the New York metropolitan area, with the states most dependent on it including Alabama, Georgia, Tennessee and the Carolinas, Kloza said.
To ease shortages, the White House is considering temporarily waiving a law that says ships delivering products between US ports must be built and manned by Americans.
The Transportation Department also is relaxing some workforce requirements and enlisting railroads to deliver fuel inland, while the Environmental Protection Agency has lifted some fuel quality requirements on an emergency basis.
U.S. Energy Secretary Jennifer Granholm said officials are considering moving supply by train or ship if necessary.
Secretary Granholm also warned service station owners: ‘We will have no tolerance for price gouging.’
On Tuesday, the governors of Florida, Virginia and Georgia joined North Carolina in declaring states of emergency in a bid to protect fuel supplies, with some gas pumps already dry in Atlanta and other cities.
South Carolina Governor Henry McMaster, a Republican, said that the state of emergency already in effect for the COVID-19 pandemic made it unnecessary to issue a new declaration.
‘Because our state is currently under a state of emergency, transportation waivers and price gouging laws are in effect to facilitate fuel delivery and protect consumers,’ McMaster said in a tweet.
The Colonial Pipeline runs from the Gulf Coast to the New York metropolitan region, but states in the Southeast are more reliant on the pipeline for fuel.
Other parts of the country have more sources to tap. For example, a substantial amount of fuel is delivered to states in the Northeast by massive tankers.
‘What you´re feeling is not a lack of supply or a supply issue. What we have is a transportation issue,’ said Jeanette McGee, spokeswoman for the AAA auto club.
‘There is ample supply to fuel the United States for the summer, but what we’re having an issue with is getting it to those gas stations because the pipeline is down.’
The average national gasoline price rose to above $3.00 a gallon on Wednesday, the highest since 2014, the American Automobile Association said.
The fuel shortage has caused frustration for drivers across the South, sending motorists on desperate hunts for stations that still have gas.
‘This place is dead closed,’ said Charles Staples, a 31-year-old banker, after circling rows of shut fuel pumps in his Volvo at an Atlanta station. ‘I heard about the thing, but I just thought they’d be long lines or something.’
In Raleigh, the last few stores with gas were those along major thoroughfares, said Todd Sloan, a general contractor. ‘Those that have fuel have very long lines,’ he said.
De Haan, the petroleum analyst for GasBuddy, said on Wednesday that panic buying had become an even bigger issue than the pipeline outage.
He said that the ‘racks’ where tanker trucks pull fuel had fairly good supply, but that tankers were unable to get gas to stations quickly enough to keep up with soaring demand at gas stations.
‘There are a couple suppliers at these racks without fuel, but overall this has turned into a panic and hoarding situation,’ De Haan told CNBC.
‘There is fuel in these markets yet, but now with the tanker truck driver shortage there is absolutely no way that stations can stay anywhere caught up with the increase in demand,’ he added.
The US has been suffering a nationwide shortage of professional truckers for some time, with many truckers approaching retirement and few younger workers willing to take up the difficult job.
The shutdown of the biggest U.S. fuel pipeline by a ransomware attack highlights a systemic vulnerability: Pipeline operators have no requirement to implement cyber defenses.
The U.S. government has had robust, compulsory cybersecurity protocols for most of the power grid for about 10 years to prevent debilitating hacks by criminals or state actors.
But the country’s 2.7 million miles of oil, natural gas and hazardous liquid pipelines have only voluntary measures, which leaves security up to the individual operators, experts said.
‘Simply encouraging pipelines to voluntarily adopt best practices is an inadequate response to the ever-increasing number and sophistication of malevolent cyber actors,’ Richard Glick, the chairman of the Federal Energy Regulatory Commission (FERC), said.
Protections could include requirements for encryption, multifactor authentication, backup systems, personnel training and segmenting networks so access to the most sensitive elements can be restricted.
FERC’s authority to impose cyber standards on the electric grid came from a 2005 law but it does not extend to pipelines.
Colonial did not immediately respond to a query about whether cybersecurity standards should be mandatory.
The American Petroleum Institute lobbying group said it was talking with the Transportation Security Administration (TSA), the Energy Department and others to understand the threat and mitigate risk.