CHARLOTTE — Hit by a cyberattack, Colonial Pipeline -- the operator of a major U.S. fuel pipeline -- said Monday it hopes to have services mostly restored by the end of the week as the FBI and administration officials identified the culprits as a gang of criminal hackers.
U.S. officials sought to soothe concerns about price spikes or damage to the economy by stressing that the fuel supply had so far not experienced widespread disruptions, and the company said it was working toward “substantially restoring operational service” by the weekend.
[ ALSO READ: FBI names DarkSide for Colonial Pipeline cyberattack; willl prices at the pump increase? ]
The White House said in a statement late Monday that it was monitoring supply shortages in parts of the Southeast and that President Joe Biden had directed federal agencies to bring their resources to bear.
Colonial Pipeline, which delivers about 45% of the fuel consumed on the East Coast, halted operations last week after revealing a ransomware attack that it said had affected some of its systems.
Nonetheless, the attack underscored the vulnerabilities of the nation’s energy sector and other critical industries whose infrastructure is largely privately owned. Ransomware attacks are typically carried out by criminal hackers who scramble data, paralyzing victim networks, and demand large payments to decrypt it.
[ FIND AND AVOID GAS SHORTAGES: Gas Buddy Gasoline Availabilty Tracker ]
The Colonial attack was a potent reminder of the real-world implications of the burgeoning threat. Even as the Biden administration works to confront organized hacking campaigns sponsored by foreign governments, it must still contend with difficult-to-prevent attacks from cybercriminals.
“We need to invest to safeguard our critical infrastructure,” Biden said Monday. Energy Secretary Jennifer Granholm said the attack “tells you how utterly vulnerable we are” to cyberattacks on U.S. infrastructure.
The attack came as the administration, still grappling with its response to massive breaches by Russia of federal agencies and private corporations, works on an executive order aimed at bolstering cybersecurity defenses. The Justice Department, meanwhile, has formed a ransomware task force designed for situations just like Colonial Pipeline, and the Energy Department on April 20 announced a 100-day initiative focused on protecting energy infrastructure from cyber threats. Similar actions are planned for other critical industries, such as water and natural gas.
(WATCH: Colonial Pipeline VP takes Channel 9 to Huntersville spill and recovery site)
Despite that, the challenge facing the government and the private sector remains immense.
In this case, the FBI publicly assigned blame Monday by saying the criminal syndicate whose ransomware was used in the attack is named DarkSide. The group’s members are Russian speakers, and the syndicate’s malware is coded not to attack networks using Russian-language keyboards.
Anne Neuberger, the White House deputy national security adviser for cyber and emerging technology, said at a briefing that the group has been on the FBI’s radar for months. She said its business model is to demand ransom payments from victims and then split the proceeds with the ransomware developers, relying on what she said was a “new and very troubling variant.”
She declined to say if Colonial Pipeline had paid any ransom, and the company has not given any indication of that one way or the other. Though the FBI has historically discouraged victims from making payments for fear of promoting additional attacks, she acknowledged “the very difficult” situation that victims face and said the administration needs to look “thoughtfully at this area” of how best to deter ransomware.
“Given the rise in ransomware, that is one area we’re definitely looking at now to say, ‘What should be the government’s approach to ransomware actors and to ransoms overall?’”
Speaking later in the day at a conference on national security, Neuberger said the administration was committed to leveraging the government’s massive buying power to ensure that software makers make their products less vulnerable to hackers.
“Security can’t be an afterthought,” Neuberger said. “We don’t buy a car and only then decide if we want to pay for seatbelts and airbags.”
The U.S. sanctioned the Kremlin last month for a hack of federal government agencies, known as the SolarWinds breach, that officials have linked to a Russian intelligence unit and characterized as an intelligence-gathering operation.
In this case, though, the hackers are not known to be working at the behest of any foreign government. The group posted a statement on its dark web site describing itself as apolitical. “Our goal is to make money, and not creating problems for society,” DarkSide said.
Asked Monday whether Russia was involved, Biden said, ”I’m going to be meeting with President (Vladimir) Putin, and so far there is no evidence based on, from our intelligence people, that Russia is involved, although there is evidence that the actors, ransomware, is in Russia.
“They have some responsibility to deal with this,” he added.
U.S. officials have sought to head off anxieties about the prospect of a lingering economic impact and disruption to the fuel supply, especially given Colonial Pipeline’s key role in transporting gasoline, jet fuel, diesel and other petroleum products between Texas and the East Coast.
Colonial is in the process of restarting portions of its network. It said Monday that it was evaluating the product inventory in storage tanks at its facilities. Administration officials stressed that Colonial proactively took some of its systems offline to prevent the ransomware from migrating from business computer systems to those that control and operate the pipeline.
[ ALSO READ: Size of pipeline gasoline spill again underestimated in Huntersville ]
In response to the attack, the administration loosened regulations for the transport of petroleum products on highways as part of an “all-hands-on-deck” effort to avoid disruptions in the fuel supply.
“The time of the outage is now approaching critical levels and if it continues to remain down we do expect an increase in East Coast gasoline and diesel prices,” said Debnil Chowdhury, IHS Markit Executive Director. The last time there was an outage of this magnitude was in 2016, he said, when gas prices rose 15 to 20 cents per gallon. The Northeast had significantly more local refining capacity at that time.
The pipeline utilizes both common and custom technology systems, which could complicate efforts to bring the entire network back online, according to analysts at Third Bridge.
Granholm, the Energy Secretary, said “Cyber attacks on our critical infrastructure — especially energy infrastructure — is not going away.”
(WATCH: What you need to know about the Colonial Pipeline cyberattack)
“This is a serious example of what we’re seeing across the board in many places and it tells you that we need to invest in our systems, our transmission grid for electricity. We need to invest in cyber defense in these energy systems,” she told Bloomberg TV.
The attack has not affected the supply of gasoline, she said, “but if it goes on too long, of course that will change.″
Gasoline futures ticked higher Monday. Futures for crude and fuel, prices that traders pay for contracts for delivery in the future, typically begin to rise anyway each year as the driving season approaches. The price you pay at the pump tends to follow.
The average U.S. price of regular-grade gasoline has jumped 6 cents over the past two weeks, to $3.02 per gallon, which is $1.05 higher than a year ago. The year-ago numbers are skewed somewhat because the nation was going into lockdown due to the pandemic.
The attack on the Colonial Pipeline could exacerbate the upward pressure on prices if it is unresolved for a period of time.
Some local stations seeing gas shortages as people rush to pumps
Some local stations are running out of gas while others are raising prices while Colonial Pipeline is shut down following a cyberattack.
North Carolina is under a State of Emergency and analysts say the longer it takes to get the pipeline back online, the deeper the impact.
“When you go beyond five days out to about a week, a week and a half, you start running into actual physical losses,” Wells Fargo Securities Analyst Roger Read said. “After 10 days of an outage, it would then become very challenging.”
In South Carolina, Gov. Henry McMaster said his office has been in constant contact with the Office of Regulatory Staff about the shutdown and will be ready to take any additional steps that may be necessary.
“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. “There is no need to rush to top off your gas tanks or hoard gas. The pipeline is expected to resume operations by the end of the week.”
If you need gas, you should prepare for long lines of cars waiting to fill up. Many people across the region are nervous about a possible gas shortage so they are filling up. But if you have a full tank, don’t top off.
As South Carolina bureau reporter Greg Suskin filled up on Monday night, he said the station taped off the pumps. Greg said he learned that some stations that were out of gas Monday night, had gas as of Tuesday morning.
Officials said the problem is “panic-buying” -- people who fill up when they don’t need to and bringing extra containers to fill those up as well.
Channel 9 spoke to the manager of a busy gas station in Rock Hill, who said they are doing OK despite the rush of to the pumps.
“We never dropped down below 700 gallons of regular gas before we got our next shipment, and we’ve had two shipments plus a diesel truck came in since then,” store manager Erin Hope said.
In Concord off Christenbury Parkway, Eyewitness News anchor Elsa Gillis stopped at a QT where drivers were lining up to get gas and an employee was outside directing traffic.
The store manager said they have been getting calls all day asking if they still had gas and by Tuesday afternoon, they were running out.
He said the station usually gets four to five deliveries in the morning, but that did not happen Tuesday morning.
(WATCH: Gas prices rising, State of Emergency issued after Colonial Pipeline cyberattack)
In the Hickory area, Channel 9′s Dave Faherty learned several gas stations had run out while others started limiting purchases to $20 for now.
At a gas station in north Hickory, Channel 9 saw the line for gas stretch across the parking lot. Many of the people in Catawba County who spoke to us said they visited several gas stations before finally finding fuel.
“Eight, ten places like I said even the ones that have gas, it’s hard to get in there,” resident David Canham said.
“It’s like the toilet paper craze of 2020,” resident Lydia Carlino said. “I don’t know what happened to all the gas.”
“It’s been so frustrating,” driver Kaylee Cone said. “I didn’t know it was going to happen so quickly.”
The school districts in Hickory as well as Burke and Caldwell counties said they are working with their vendors and have enough fuel for now for the hundreds of buses across the Foothills.
Watauga County Schools said it buys fuel ahead of time and keeps it in storage tanks. The district said it has enough fuel to make it through the end of the school year.
North Carolina, South Carolina enact price gouging law during pipeline outage
North and South Carolina’s top prosecutors have enacted a measure criminalizing price gouging following the shutdown of a pipeline that carries fuel to much of the state.
On Tuesday, Attorney General Alan Wilson announced that he had declared an “abnormal disruption” in the fuel market following the hacking of the Colonial Pipeline, allowing him to put the state’s price gouging statute in effect.
North Carolina Attorney General Josh Stein made a similar announcement Tuesday afternoon, saying the price gouging law is in effect after Gov. Roy Cooper declared a statewide state of emergency.
In such a circumstance, anyone found to be renting or selling a commodity at “an unconscionable price” could be charged with price gouging.
Anyone who suspects price gouging in South Carolina can contact Wilson’s office at 803-737-3953 or email pricegouging@scag.gov.
In North Carolina, you can report potential price gouging by calling 1-877-5-NO-SCAM or by filling a complaint here.
The pipeline, operated by Georgia-based Colonial Pipeline, carries gasoline and other fuel from Texas to the Northeast. It delivers roughly 45% of fuel consumed on the East Coast, according to the company.
It was hit by what Colonial called a ransomware attack, in which hackers typically lock up computer systems by encrypting data, paralyzing networks, and then demand a large ransom to unscramble it.
The Associated Press contributed to this report.
(WATCH: What to do if you see price gouging)
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Some local gas stations see shortages amid Colonial Pipeline shutdown - WSOC Charlotte
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