Colonial Pipeline, one of the largest U.S. oil and gas pipeline operators, may have been forced to bow down and pay a ransom before it could gradually restore supplies after being choked off by hackers from a vital transportation pipeline.
Citing sources familiar with the matter, the media said on Thursday that Colonial Pipeline had paid a ransom of $4 million to $5 million to hackers as early as last Friday, May 7, local time, in cryptocurrency with untraceable transactions, just hours after the company was hit by the cyber attack. After the ransom was paid, the hackers provided a decryption tool and the company was able to restore its network.
If the above information is true, then the case of Colonial Pipeline’s extortion should be considered a reversal in the public perception. As numerous media outlets reported earlier this week, Colonial Pipeline had no intention of caving in to cyber extortionists in order to restore the largest fuel pipeline system in the United States.
Colonial Pipeline declined to comment after the news broke. Asked if he was aware that the company had paid the ransom, President Joe Biden said he had no comment, saying that Colonial Pipeline would soon be fully restored to fuel delivery capacity and that the fuel shortage situation on the U.S. East Coast would end within days thanks to Colonial’s pipeline restart. Billionaire John Catsimatidis, for his part, told another media outlet that the company had paid the terrorists, out $4 million as far as his sources knew.
International crude oil futures fell further after the news broke during the early U.S. trading session. U.S. WTI crude oil once approached the $63 mark in midday trading to set a new three-week intraday low, down more than 4.7 percent during the day. Brent crude oil fell below $66.50 in midday trading to set a new two-week low, down slightly more than 4% intraday. In the end, both U.S. oil and Brent closed down more than 3%, the biggest closing loss since April 5. Commentary said the crude oil selloff was affected by the Indian epidemic, easing supply shortages in the eastern U.S. and intraday strength in the dollar.
As mentioned in the Wall Street Journal article, on Friday Colonial Pipeline, which carries 45% of the fuel supply on the U.S. East Coast and delivers more than 100 million gallons of fuel per day, shut down a key transportation pipeline due to a hacker ransomware attack. That day the U.S. Department of Transportation’s Federal Motor Carrier Safety Administration declared a state of emergency in 17 states and Washington, D.C., in response to the situation.
On Monday Colonial Pipeline said the cyberattack caused a complete suspension of operations on the pipeline network and that the attack caused a localized impact on the company’s system. The company has regained partial control of the pipeline network and will seek to gradually resume operations, with most service expected to be restored by the end of the week; it is working with numerous carriers to deliver natural gas products by ship to multiple terminals.
On Monday, the FBI confirmed that the attack came from the Russian hacking group DarkSide, which later claimed responsibility, saying its goal was to “make money” and not “cause problems” for society, without mentioning Colonial Pipeline or the amount being demanded. Pipeline or the amount demanded. But some media said the hacker group demanded $100 million in ransom.
U.S. Energy Secretary Jennifer Granholm said Tuesday that one of Colonial Pipeline’s major transportation pipelines had temporarily resumed operations under manual control and that it would take several days to fully restore its transportation system. and by noon that day, all markets will have received fuel products from the division’s system.
However, fuel supplies remain constrained in multiple U.S. states.
Gas Buddy, an agency that tracks the implementation of fuel prices, counted this Tuesday that some gas stations in six U.S. states – Virginia, Florida, Georgia, Alabama, Tennessee and South Carolina – are experiencing fuel shortages due to cyber attacks on the Colonial Pipeline.
Gas Buddy data shows that about 68 percent of gas stations in North Carolina are currently short of gasoline. In three states – Georgia, South Carolina and Virginia – and Washington, D.C., about half of gas stations are reportedly short on supplies.
Billionaire John Catsimatidis said this Friday that the Colonial Pipeline’s pipeline should be clear by next Monday at the latest. That’s the same goal Colonial Pipeline mentioned this Monday. The division said at the time that some fuel lines had been brought back online in an effort to restore service by the end of the week.
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