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A cyber-attack exposes risks to America’s energy infrastructure

And the threats are likely to grow


PIPELINES, LIKE cables and substations, are the type of dull, critical infrastructure that Americans don’t think about until, suddenly, they must. On May 7th a cyber-attack prompted Colonial Pipeline, a firm headquartered in Georgia, to shut down its pipeline that stretches from Texas to New Jersey, supplying about 45% of the petrol and diesel consumed on the east coast. Federal officials confirmed that DarkSide, a ransomware gang believed to be based in Russia or elsewhere in the former Soviet Union, was responsible. “We’re not talking about some small pipeline,” explains Amy Myers Jaffe, author of “Energy’s Digital Future”, a new book. “We’re talking about the jugular.”

Whether there is a petrol shortage depends in part on how long the shutdown lasts. Colonial Pipeline’s carefully worded target of “substantially restoring operational service” by May 15th conveys both the difficulty of returning to normal and a desire to contain panic. Much also depends on whether anxious drivers rush to buy petrol, as they did in the oil shocks of the 1970s. If 30m car-owners with half a tank decide to fill up, reckons S&P Global Platts Analytics, a data group, they would guzzle over 4m barrels, more than the recent daily demand of the entire eastern seaboard. Many are buying while they can. Long queues formed at petrol stations in the south-east on May 11th. Some stations limited purchases; others ran out of fuel. The White House said it had established “an interagency response group” to “ensure a continuing flow of fuel”.

Even if supplies are restored quickly, however, America faces a more stubborn problem. Despite more than a decade of attention to cyber-security, the country’s most critical infrastructure—the pipelines, power generators and grids on which the economy depends—remains woefully exposed to hackers. Indeed the energy system may yet become more vulnerable, not less.

Securing oil and electricity assets used to mean guarding against physical attacks: a bombing of a crucial refinery, for instance. Those risks remain, but hackers can also inflict grave damage. In 2010 the Stuxnet worm, generally believed to be deployed by Israel and America, targeted a nuclear facility in Iran. In 2015 and 2016 Russian hackers caused blackouts in Ukraine.

Aware of such risks, American executives and politicians have tried to mitigate them. The American Petroleum Institute, the country’s main oil lobby, has held an annual conference on cyber-security since 2006. The energy department has dutifully developed “The Energy Sector Specific Plan” for cyber-threats, in 2015, “The Multiyear Plan for Energy Sector Cybersecurity”, in 2018 and “The 2020 Cybersecurity Multiyear Program Plan”, to name but a few.

Yet weaknesses remain. The shutdown of the Colonial Pipeline exposes gaps in companies’ cyber-armour. It also reveals the idea that shale oil might guarantee energy security to be a fallacy. Oil may be fungible but oil infrastructure is not, notes Michael Tran, a commodity strategist at RBC Capital Markets. America’s north-east is particularly exposed to attack, Mr Tran says. A dearth of local refineries makes the region dependent on pipelines and tankers for oil products.

The federal government’s cyber-defences are imperfect, too. The Government Accountability Office (GAO), the agency charged with criticising other agencies, has found cyber-security a particularly rich subject. The Transportation Security Administration (TSA) is supposed to help safeguard oil and gas pipelines; in 2019 the GAO identified “factors that limit the usefulness of TSA’s risk assessment”. In March the GAO reported that the energy department’s plans for cyber protection “do not fully address risks to the grid’s distribution systems”, leaving major cities susceptible.

Worryingly, cyber-attacks may increase in number and ambition. Hackers are using ransomware to infiltrate larger companies and seek higher payments. Their average ransom payment has roughly doubled over the past year, according to Coveware, a tracking firm (see chart). Furthermore, changes to the electricity system may, without sufficient planning, make it more vulnerable. As more devices are connected to the internet, hackers have a larger number of targets. As more cars run on electricity rather than combustion, a blackout can wreak broader damage. And as transmission lines connect distant power systems, helping to balance intermittent wind and solar power, a problem in one grid can have an impact on another.

These challenges are not unique to America. But they pose a particular headache for President Joe Biden, who is trying to win support for climate proposals in his $2trn infrastructure bill. His proposed budget includes $2.1bn for the government’s main cyber-security agency, a level that Ms Jaffe argues is too low. Limiting climate change and fighting cyber-threats are hardly mutually exclusive endeavours Mr Biden must make a credible case that he can make America’s energy system both greener and more secure.