Pipeline fuel shortage emergency East Coast – In Kind Gas

4 cent Petroleum Industry 1850-1959

            According to Bloomberg media, a fuel pipeline which serves 90 U.S. military installations in the eastern United States has been shut down because of a hacker attack on the software which directs the fuel supply.  Bloomberg reports the Federal Bureau of Investigation  accused a ransomware  gang known as DarkSide for the attack. The headline reads ‘Gas Pumps Run Dry in U.S. South as Pipeline Shutdown Bites’ by Blair and Bias May 11. Bloomberg continued. Motorists are struggling to find gas and diesel as stations run dry, from Virginia to Louisiana. As panic sets in the Biden White House is relaxing new green deal pollution rules to get fuel in from the north and west. The crisis has been described as ‘catastrophic’. Governors should declare a state of emergency. Gas prices are spiking, touching $3 a gallon.  Jet fuel shortage is threatening aviation.  The Colonial pipeline is the largest in the country, with over five thousand miles of pipeline, and moves over a hundred million gallons a day (2.5 million barrels) an amount which exceeds the oil consumption of Germany. This ‘vital economic lifeline’  shut over the past weekend. Businesses with access to fuel are ‘topping’ off to wait this out. Gas stations are covering pumps with yellow and red ‘out of service’ bags. As of Monday May 10, 2021,  one in fourteen gas stations in Virginia were out of gas.  This hack attack is a target of ransomware, where hackers attempt to infiltrate electric grids, hospitals, businesses, even private homes. Ransomware will block a computer’s operation system or application,  until the victim pays an extortion fee.  The Colonial pipeline ranges from Texas to New Jersey and supplies the states of Maryland, Delaware, Virginia,  Tennessee, North and South Carolina, Georgia, Alabama, Mississippi and Louisiana.

10.1 cent stamp oil Wagon from 1890s Postage

            Last year the media reported that the University of Utah paid just under a half million dollars to a ransonware gang in August 2020.  As the UofU is a state university, the tax payers of Utah paid the ransom.  That attack also stole private data, which the UofU naively believed will have been returned  and not used in exchange for the extortion.  Trusting the extortionists to keep their word that the data would not be published on the dark web.  This successful extortion certainly encourages repeat attempts.

            The ‘DarkSide’ gang is life imitating art, right out of the pages of Fleming’s James Bond versus Spectre, for Special Executive for Counter Intelligence, Terrorism, Revenge and Extortion.  Fleming’s books were ‘who dun its’, made into the movie series which has spanned 6 decades.  

 Attacking  a country’s fuel is an act of war, although  I have not read where any government spokesman has dared to  publicly speak as such. And attacking military fuel is a primary target for armed conflict.  Just demonstrating the vulnerability of the country to a sample hack is very valuable to our enemies.  Wait until bad weather sets in, or combine the attack with other assaults, or time a pipeline attack with economic panics, and the disasters can be multiplied many fold.

The gas  shutdown on the military fuel was avoidable, without added expense.  In fact, the military, meaning the taxpayers, could have saved money. Procurement officers have know about  the solution for four decades.  The solution is taking Gas In Kind.  Natural Gas consists of Methane, Butane, Propane and can be a substitute to operate gasoline powered internal combustion engines.  The United States has enough known reserves of gas and oil to operate for 30 generations to come.

The United States  Government can save $100,000,000 annually in Natural Gas Energy costs by taking gas IN KIND instead of purchasing from producers who take the gas from US minerals, intercontinental shelf, and other properties.

The Federal Government, including the Department of Defense,  is a major energy user of natural gas on military bases, in office buildings, post offices, housing projects, etc.  The Federal government is also a huge producer from existing wells and its mineral rights in western lands, the continental shelf, Alaska and a half dozen military bases. If the USG would take its gas in kind, the utility bill could be cut by $100 million annually.

            In 1981, Vance Air Force Base Enid Oklahoma had 8 natural gas wells producing 750,000 cubic feet of gas a day. The Department of Interior received cash royalties of $3800 per month on these wells, while Vance was paying $18,000 per month for gas from the local utility (probably the same gas just taken from under Vance AFB). The Air Force was buying gas at $4 a thousand cubic feet, while the Department of Interior was receiving royalties of an eighth, from selling to the producers at fifty cents a thousand cubit feet.  The gas producer would have been happy to provide the same gas to Vance instead of the gas pipeline company, and so advised the Air Force staff.   All the US continental shelf production of gas and oil has clauses allowing the government to take the product ‘in kind’ instead of cash royalties.   All of the Federal lands in the west, and military bases also have the right to take production in kind.  The natural gas which comes out of the ground can be used with no  further treatment. Military bases in Louisiana, Florida, Oklahoma, Texas, and Colorado have this ability. The pipelines do not even need to go outside the perimeter of the base.  The production can then be directed to other government use, for buildings, housing, heating and power.

About 1989, the DOD centralized gas purchases in order to cut its nationwide costs by half again, saving about $100 million a year, if fully used. Good. But, another $100 million a year net can be saved with taking Royalties in Kind. As of 1981, Interior stated that taking Royalties in Kind had never been done, although it was provided for in every mineral lease since Teapot Dome (1920s).  In the nearly 40 years since this was proposed to the Air Force,   the Military could have saved $4 billion, and counting.   Using gas produced on base avoids terrorist attack off base, and interruption anywhere along the thousands of miles of pipeline.  Before the hackers shut down the Colonial pipeline, the FBI has know of anarchists which would burn, destroy, steal, extort, blackmail, anyway they could. And now they know the pipelines are vulnerable as well.

 I assume nothing has changed since then.

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