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Fuel pipeline rebooting from cyberhack; minimal impact foreseen on LI

Traffic on I-95 passes oil storage tanks owned

Traffic on I-95 passes oil storage tanks owned by the Colonial Pipeline Company in Linden, N.J. in this 2008 photo. Credit: AP / Mark Lennihan

Colonial Pipeline, operator of the largest pipeline for gas and diesel fuel in the United States, set the "goal of substantially restoring operational service" by week’s end as it recovers from a foreign cyberhack. Experts said that prices at the pump shouldn’t rise in the New York area as a direct result of the shutdown, but they cautioned there could be a bump for other reasons such as consumer overreaction.

Robert Sinclair Jr., spokesman for AAA Northeast, said if the pipeline issue is resolved in a few days, there shouldn’t be a significant effect on Long Island gas prices or supply. "But I wouldn’t put it past retailers to jack up prices somewhat to take advantage of the situation," he said.

The FBI, which said it was notified May 7 of the hack, blamed the disruption Monday on criminal ransomware pirates operating out of Eastern Europe. "The FBI confirms that the Darkside ransomware is responsible for the compromise of the Colonial Pipeline networks," the bureau said. "We continue to work with the company and our government partners on the investigation."

In a ransomware attack, software known as malware that's designed to cause damage encrypts a computer system, making the files unusable until ransom — typically in untraceable cryptocurrency — is paid in exchange for decryption.

Colonial Pipeline said in a statement Monday that it is restoring the network in segments. The hack forced the company to shut down some 5,500 miles of its pipeline, disrupting nearly half the United States' supply to the East Coast.

In their own statement, the Darkside actors sought to explain themselves: "Our goal is to make money and not creating problems for society."

Speaking briefly at the White House, President Joe Biden said there isn't evidence so far that Russia itself is involved but urged Vladimir Putin to act against criminal hackers. "They have some responsibility to deal with this," he said.

New York and New England are relatively unscathed, partly because those areas aren’t as dependent on the Colonial pipeline as states further south, said Tom Kloza, global head of energy analyst in the Wall, New Jersey, office of the Oil Price Information Service, which is headquartered in Gaithersburg, Maryland. He saw bigger impacts from Alabama to the mid-Atlantic — Virginia, Delaware and Maryland.

Long Island has enough supply coming from refineries in New Jersey, Philadelphia and Delaware, he said.

But there is one variable that could change things — crowd behavior spurring gas hoarding, Kloza said.

"If people start to behave as though they perceive there’s going to be outages or shortages … it’s kind of the toilet paper syndrome [seen in the early months of the COVID-19 pandemic], then it becomes the self-fulfilling prophecy," he said.

Gas prices on Long Island have increased about 7 cents in the past week but that’s because wholesale gas prices jumped last week, and retailers had yet to catch up with some of the increases, he said.

John Catsimatidis, the billionaire grocer whose company subsidiary also operates an oil refinery and more than 400 gas stations and convenience stores, said that gas prices will rise as a result of the attack — perhaps 4 cents a gallon, he said at a midtown Manhattan news conference.

Catsimatidis said prices typically go up during the summer, but "because of this situation, it’s gonna go higher, even more than it was anticipated."

Following news of the attack, Rep. Andrew Garbarino (R-Bayport) said he wants the government to regulate cryptocurrencies like the hackers demanded — digital currency that can be used to purchase goods and services and uses an encrypted, online ledger to secure transactions. He said he didn’t yet have specifics of how he wants it regulated.

With The Associated Press

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