Energy Report: America Held Hostage Day 5

The hack attack on the Colonial Pipeline is entering day 5 and is already causing some spot shortages of gasoline on the East Coast as they are losing 1.25 million barrels of gasoline a day. Airports are also reporting shortages of Jet fuel that could impact flight schedules. The group that is claiming responsibility is called Darkside. They are from Eastern Europe and say they are apolitical and only in it for the money. Yet this attack has gone too far and requires a national effort to stop these attacks as it risks U.S. security and puts American lives at risk. Still, Biden says that Russia has “some responsibility” to come down on the hackers that may be based in Russia.

Colonial Pipeline says they hope to substantially restore service to the pipeline by the end of the week and has reopened some auxiliary pipelines that they are operating manually so that they can avoid the risk that there are still some latent bugs in the computer network. Yet "substantially reopened" does not sound all that convincing or comforting.

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Image Source: Unsplash

The crude oil market and gasoline futures sold off on the news. Oil also faced pressure because of reports that at least one Gulf Coast refiner is reducing runs because of the Colonial Pipeline hack. Reports that traders are booking cargoes of gasoline from Europe are keeping futures prices calm as supply backs up on the Gulf Coast and drops on the East Coast. Yet there are fears that panic buying of gasoline on the East Coast could cause tanks to run dry if the pipeline does not come back online.

Bloomberg News reported that due to jet fuel shortages, "American Airlines Group Inc. has added additional stops to two long-haul flights originating from Charlotte, North Carolina. Airlines flying out of Philadelphia International Airport are burning through jet-fuel reserves and the airport has enough to last “a couple of weeks," a spokeswoman said.

Oil also has geopolitical risk issues that are overhanging the market. Fox News reported that "U.S. warships Monday in the Strait of Hormuz fired warning shots at armed Iranian speedboats that had approached within 150 yards of the American flotilla, U.S. officials said. Two of the Iranian speedboats, armed with machine guns, broke off from a group of 13 Iranian craft and headed toward the U.S. formation at a high rate of speed, according to U.S. Naval Forces Central Command (NAVCENT). "After U.S. naval ships repeated verbal and acoustic warning, sounded five blasts of the ship’s horn, and fired warning shots," the two Iranian craft withdrew, according to a statement by NAVCENT. The formation of six U.S. warships was escorting the guided-missile submarine USS Georgia through the Strait and into the Persian Gulf.

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