Largest Pipeline in U.S. Attacked! Fuel Shortage Feared…

Malware payload display

The Colonial Pipeline was forced to halt operations this past Friday due to a confirmed cybersecurity attack.

The pipeline, which runs the length between Texas and New Jersey, is the largest in the United states and transports almost half of the East Coast’s fuel supply. As such, this recent disruption has many officials concerned that a fuel shortage could be coming for East Coast U.S.A.

… And with national gas prices currently hovering around $2.96 per gallon, many are concerned that, should the pipeline continue to be shut down for any further length of time, available fuel would see prices move even higher.

What We Know…

Map of the pipeline (abcnews.com)

Not all the facts are known about Friday’s cyber-attack, but FBI officials were notified immediately of the situation and report their belief that the culprits acted on their own and not through a state entity.

The attack was played out using a type of malware known as Ransomware which threatens to publish a victim’s data or block access to it unless a ransom is paid.

President Biden was briefed on the situation early Saturday morning and, via a White House spokesperson, had the following update: “The federal government is working actively to assess the implications of this incident, avoid disruption to supply and help the company restore pipeline operations as quickly as possible.

At present, Colonial Pipeline officials have announced that while their main pipe continues to be shut down, a handful of smaller lines are once again up and operational… Welcome good news for sure, but not enough to ease the overall tensions in the sector.

Market Reflections

For the market minded, investors should keep an eye on, not only the fuel sector, but the cyber securities sector as well as this area in particular could see a boost due to the attack.

Colonial Pipeline is privately held by a total of five separate entities:

  • CDPQ Colonial Partners
  • KKR – Keats Pipeline Investors
  • Koch Capital
  • IFM (U.S.) Colonial Pipeline 2
  • Shell Midstream Operating

Any type of major energy shortage would most likely create its own set of serious market implications for, not only the companies listed above, but the overall fuel sector.

As of Sunday, fuel prices had already jumped in trading as a direct reflection of concerns over the breach and resulting closure.

Should the main pipeline remain closed, fuel shortages would be inevitable in certain sectors of the United States and, through the simple act of supply and demand, could most likely lead to the rise of fuel prices and fluctuation of fuel related stocks.

Officials speculate that a fuel shortage at a time when America was just starting to get back on its feet would not only lead to fluctuations in the markets and overall fuel prices but would ultimately restrict travel and the regions overall economic growth. Growth that the entire U.S. economy has been counting on during the current early stages of rebuilding.

Learn More Here…

We’ll continue to watch this developing story…

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