Why would a company that paid out 670 million in dividends to it owners in 2018 be lax in cyber security?
Over the past decade, Colonial has distributed nearly all its profits, sometimes more, in the form of dividends. In 2018, for example, it paid nearly $670 million to its owners, even more than the $467 million net income. Last year, it returned to investors over 90% of its $421.6 million in profits.
The pipeline began six decades ago as a proud joint project of big oil companies -- the U.S. commerce secretary, Luther H. Hodges, was present for the 1962 groundbreaking -- today it’s mostly owned by an arm of Koch Industries and several Wall Street investors, and is run as much like a financial asset as a major piece of infrastructure.
Colonial Pipeline, based in the Atlanta suburb of Alpharetta, Georgia, operates the largest fuel pipeline in the country, transporting more than 100 million gallons a day from Houston to New York City, half the region’s needs.
There have been warnings coming for cyber security specialist, Matias Katz, founder of the cybersecurity firm Byos, estimates that less than 25% of the U.S. oil and gas industry has adequate cybersecurity in place.
Colonial heard this and when questioned, Colonial said it has increased overall spending on information technology by 50% since 2017, when a new chief information officer was appointed. Colonial uses more than 20 different and overlapping cybersecurity tools to monitor and defend the company’s networks, and its third-party investigator “has acknowledged many of the best practices we had in place prior to the incident.”
So was the attack on the systems of Colonial just to raise awareness? Show how dependent we are on fuel? Show how important pipelines and their security are for the country?
Paying 5 million to hackers that were let into the system after putting a halt to the ability to bill customers and pay suppliers seems like a small price to pay to raise the awareness that the entire country has seen come to light over the last weeks or so. Hit the pocket books of people, make them wonder about their ability to get to a grocery store. Logical people will call for higher security.
Of course, like everything else, we are never going to know. There is cause and reaction being used every day in the media, or it could just be for a lack luster cyber security system. Seems like it was the previous.