We’re on the brink of a cyber war. And now it is a real threat.
America’s new oil shortage
This week gas stations ran out of oil in several American states. Read that again. Ran out of oil.
Unlike last year’s shipping problem with negative oil prices, our country was under attack. We had a pipeline attack. The Colonial Pipeline attack. With a hefty ransom.
Sounds like the beginning of a Tom Clancy novel.
An energy supply shock
It’s been a few years since we’ve had an oil shortage. Now hundreds of gas stations across the East Coast were short on supply. This wasn’t a supply chain issue.
An internet hacker group known as the DarkSide shut down 5,550 miles of pipe. They attacked critical infrastructure and held an energy company up for ransom. This is a big deal.
First, ransomware attacks are quite common. Over $2 billion in cyber ransom has been paid out by businesses in recent years. Ransomware is a type of malware designed to lock computers by encrypting data and demanding payment to regain access.
In some ransomware attacks, the hacker group will encrypt the victim’s data and threaten to release confidential data if the victim doesn’t pay. Also known as a double extortion.
The problem is cyberattacks are becoming more sophisticated, frequent and aggressive.
Our country is exposed
Right now, the world knows about our weaknesses. And energy pipelines are an attack vector.
Let’s cover the problems.
On Friday, the DarkSide shut down the main parts of the Colonial Pipeline network. The company has not been able to restore operations, cutting off energy supplies to half of the East Coast. This includes barrels of gas, diesel and jet fuel.
On Monday North Carolina declared a state of emergency and temporarily suspended vehicle fuel regulations "to ensure adequate fuel supply supplies throughout the state".
Security expert, Brian Krebs, published a detailed post on the DarkSide Attack here.
Here’s an 80-page report by a government task force for Security and Technology.
They want to focus on ransomware response. The group has developed frameworks to deter and disrupt cyber attacks. This is a great initiative but I imagine cyber attackers are two steps ahead. Especially if this is a public report laying out the government’s counter attacks.
Energy prices will go to the moon
Retail gas prices broke $3 a gallon this week. The first time in six years. Beyond inflationary concerns, gas prices are quite sensitive to political warfare.
Over 1,000 gas stations are out of fuel and suppliers are forced to ration distribution. Oil tankers are beginning to stockpile fuel again.
Now the White House has approved some interstate shipping so truckers are distributing shipments of oil and gas. We may have to waive the Jones Act again so the East Coast has access to foreign tankers to stabilize supply
I imagine airline prices will increase as they load up on fuel and preserve supplies.
P.S. Colonial Pipeline has paid $5 million in ransom to the hackers so far.
The U.S. Economy is very fragile
Have you watched the movie Live Free or Die Hard?
The non-tech savvy Bruce Willis faces the ultimate Fire Sale. Spoiler alert, the country’s entire infrastructure was under attack from one NSA cyber expert.
But this is real life and not our first cyber attack.
This is digital warfare.
The U.S. is not in a good position. We are under threat. Our economy is under threat and has not recovered.
Last year we faced a supply chain shortage during the pandemic lockdowns.
Now we face a semiconductor shortage to produce cars. Auto shipments have been delayed for Q3 & Q4 for every manufacturer. Including Tesla.
Even the hard metals for electric car batteries are sourced from overseas.
I don’t have a specific solution but think our new Infrastructure Bill needs to focus on transportation and telecom. Everything else is secondary at this point. Even a $1 trillion investment in each category won't be enough. But it will be something.
The Best Cyber Investments
Cyber is not perfect but it is improving and necessary. Plus we have no other defense against our system.
With that said, there’s a lot of money to be made here.
My favorite companies in the space are CrowdStrike (CRWD) and Fortinet (FTNT). Both companies provide top notch cybersecurity software for firewall and endpoint security.
CACI International (CACI) that provides cyber support for the Federal Government. This is a solutions based company, unlike the software businesses mentioned above.
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Discuss Elon’s energy tweet
I can’t end the week without mentioning Elon Musk. First he did a terrific job at SNL. the Chad on Mars skit was my favorite.
But earlier this week Elon tweeted about the rising costs of computing power for Bitcoin. Worth mentioning because Tesla owns $2.5 billion in Bitcoin and he’s the leader of climate change.
While Bitcoin dropped because of his concerns, I think he’s working on a renewable energy solution to solve the energy cost problem. It’s possible his Bitcoin tweet was related to the rising energy prices from this cyber attack.
I’m uncertain but I wouldn’t overlook it.
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