Cyberattack on US’ largest fuel pipeline triggers oil hikes [Video]

WHAT YOU NEED TO KNOW:

• The Colonial Pipeline System declares victim of a cyber security attack, causing oil price hikes.
• The Colonial Pipeline system covers 5,500 miles and transports about 45% of fuel consumed on the East Coast.
• According to experts, the national average on price spikes could surpass $3 a gallon this summer.

The Colonial Pipeline System, the US’ largest fuel pipeline, claims to be a victim of a cyber security attack, causing a pipeline shutdown on Friday.

This disruption, according to experts, could result in oil hikes.

The Colonial Pipeline system is said to cover 5,500 miles and transports about 45% of fuel consumed on the East Coast. Over all, it records 2.5 million of transported barrels per day consisting of gasoline, diesel, jet fuel, and home heating oil.

With its four main lines offline to date, it has significantly affected gasoline prices, and worse, if the outage persists, it could further the pain for drivers as the seasonal peak in demand approaches.

Global head of Energy Analysis for Oil Price Information Service, Tom Kloza said that “the number of days that the line is out of service is critical.” In addition, Kloza said that “the greatest concern is in coastal states from Georgia North to the Delmarva Peninsula.”

The Oil Price Information Service tracks gas prices at 140,000 US stations.

Efforts are being laid out with urgency, according to the US Department of Transportation, as it issued an emergency operating service, where truck drivers that transport gasoline, diesel, and jet fuel are allowed longer working days.

What worries stakeholders is that the national average on price spikes could surpass $3 a gallon this summer, and can potentially increase if hurricanes hit the Gulf Coast, or worse, additional supply outages.

With the limited supply, higher fuel charges are expected. In fact, an increase from 1.5% to as much as 4% in early trading was recorded Monday, giving rise to a $2.16 price per gallon.

Experts from various oil consultancies and associates across the US weigh on the gravity of the issue, saying that “five days of business shut down could bear a serious blow to logistics.”

“It’s very difficult to pin the exact amount prices may rise, but for now, it appears to be a few cents per gallon, possibly growing more significant if the pipeline remains shut down for more than 2-3 more days,” analysts predicted.

Executives from the Colonial Pipeline Company, however, said that they are “already in the process of restoring service to other laterals and will bring its full system back online when it is safe to do so, in full compliance with the approval of all federal regulations.”

Source: CNN