Colonial Pipeline Cyberattack and Stock Market Reaction: Live Updates18 min read
An oil and gas pipeline system that was forced to shut down on Friday after a ransomware attack is not expected to be “substantially” restored until the end of the week, its operator, Colonial Pipeline, said on Monday.
“While this situation remains fluid and continues to evolve, the Colonial operations team is executing a plan that involves an incremental process that will facilitate a return to service in a phased approach,” the company said in a statement posted on its website. “This plan is based on a number of factors with safety and compliance driving our operational decisions, and the goal of substantially restoring operational service by the end of the week.”
The company said it was monitoring its customers’ supplies and was working with shippers to move fuel. Oil and gas prices came well off their highs of the day after Colonial’s statement.
The sudden shut down of 5,500 miles of pipeline, which the company says carries nearly half of the East Coast’s fuel supplies, has been a troubling sign of vulnerabilities in the nation’s energy infrastructure.And the shutdown had raised concerns about fuel supplies to large portions of the country. Prices on gasoline futures had soared on Monday as a result, and analysts had said a prolonged shutdown could drive them even higher — potentially affecting prices consumers pay for gas at the pump.Experts said several airports that depend on the pipeline for jet fuel, including those in Nashville, Baltimore-Washington and Charlotte and Raleigh-Durham, N.C., could have a hard time later in the week. Airports generally store enough jet fuel for three to five days of operations.
This is a developing story. Check back for updates.
The Biden administration will begin deploying $350 billion in aid to state and local governments this month, a significant step in its effort to shore up segments of the economy that have been hardest hit by the pandemic, White House and Treasury officials said on Monday.
The infusion of funds also marks the Biden administration’s most significant opportunity to date to start reviving infrastructure across the nation and to fulfill its goal of ensuring a more equitable recovery.
“With this funding, communities hit hard by Covid-19 will able to return to a semblance of normalcy. They’ll be able to rehire teachers, firefighters and other essential workers — and to help small businesses reopen safely,” Treasury Secretary Janet L. Yellen said in a statement.
The details of the disbursement have been eagerly awaited by the states, cities, territories and tribal governments that are expected to receive money. But several Republican-led states and the Biden administration are in a legal confrontation over whether states can cut taxes after taking relief money and using it to solidify their budgets.
The Treasury Department is expected to publish more formal guidance on this question later on Monday. However, in a fact sheet accompanying the announcement about the distribution on Monday, it made clear that the relief money cannot be used to subsidize tax cuts directly or indirectly.
“The American Rescue Plan ensures that funds needed to provide vital services and support public employees, small businesses and families struggling to make it through the pandemic are not used to fund reductions in net tax revenue,” the Treasury Department said. “If the funds provided have been used to offset tax cuts, the amount used for this purpose must be paid back to the Treasury.”
Treasury and White House officials made clear that they will scrutinize how the funds are being used to ensure that they budgets are not being gamed to violate the intent of the law. The Treasury Department’s new recovery office will coordinate with states to help determine if their policies are in line with conditions set forth in the law.
A White House official would not comment on whether initiatives such as Montana’s return-to-work bonuses could be funded using relief money.
States and cities are being given broad discretion on how they can use the money, which is intended to replace public sector revenue that was lost during the pandemic; provide extra pay for essential workers; and invest in sewer, water and broadband infrastructure.
The allocation of the funds is also likely to be a contentious matter as the money starts to flow. Some states have complained that states that managed the pandemic well are essentially being penalized because the formula for awarding aid is based on state unemployment rates.
The Treasury Department said on Monday that the states that were hardest hit economically by the pandemic will also get their money faster.
Local governments will generally receive half the money this May and the rest next year. But states that currently have a net increase in unemployment of more than 2 percentage points since February 2020 will get the funds in a lump sum right away.
Hoping to attract more employees, the fast-food chain Chipotle said on Monday it was increasing its wages to an average of $15 an hour by the end of June.
The company, which is looking to hire 20,000 employees for its peak season and to staff the more than 200 restaurants it plans to open this year, said the wage increase would result in hourly workers making between $11 and $18 an hour.
Chipotle is the latest restaurant chain to raise wages or offer incentives as it struggles to staff its restaurants. As coronavirus vaccinations have increased and government restrictions eased, the restaurant industry, which laid off or furloughed millions of employees during the pandemic, suddenly went on a hiring spree, as did several other service-related industries.
That sudden high demand for restaurant workers has been tough to meet. Some potential employees, whether concerned about the safety of serving customers dining indoors or buoyed by government stimulus checks, are wary of returning to work.
The April jobs report released last week showed a significant jump in the number of workers hired in the restaurant and bar sector, but employment levels at full-service restaurants in February remain 20 percent lower than a year ago, according to the National Restaurant Association. That’s the equivalent of 1.1 million jobs. Employment at fast-food and fast-casual restaurants was down 6 percent over the same period.
Raising the minimum wage to $15 an hour has been one of the items on the agenda of President Biden. An attempt to add the provision to the pandemic relief bill signed in March failed after Congress removed it from the package.
At the time, the restaurant industry had argued that a wage increase would imperil the recovery for the industry because it would result in higher prices and mean not as many workers could be hired.
Now, struggling to attract candidates, Chipotle is not only raising its hourly wages, it is offering referral bonuses for crew members and managers.
Energy prices came well off their highs on Monday afternoon, after the operator of a major petroleum pipeline in the United States said it hoped to have it “substantially” restored by the end of the week.
The pipeline, which supplies oil and gas to much of the Eastern United States, had been shut down over the weekend because of a cyberattack, and concerns about the supply of gasoline had lifted prices by as much as 4.2 percent earlier in the day and at their highest level since late 2018.
At 12:45 p.m. Eastern time, futures for gasoline for June delivery were up just 0.3 percent. Futures on West Texas Intermediate, the U.S. crude benchmark, dipped slightly to $64.83 a barrel, after climbing as much as 1.3 percent.
“While this situation remains fluid and continues to evolve, the Colonial operations team is executing a plan that involves an incremental process that will facilitate a return to service in a phased approach,” the company said in statement posted on its website on Monday. “This plan is based on a number of factors with safety and compliance driving our operational decisions, and the goal of substantially restoring operational service by the end of the week.”
The increase in the price of gasoline and oil has added to what was already a boom in commodity prices. As economies from the United States to China have shown signs of strength, demand for raw materials to power industrial growth has risen. On Monday, iron ore futures rose as much as 10 percent and copper prices extended their record high.
U.S. stocks were slightly lower on Monday, with the S&P 500 pulling back from a record as large technology stocks retreated.
The benchmark stock index had risen on Friday after an unexpectedly weak jobs report tempered expectations about how soon the Federal Reserve would consider withdrawing some monetary stimulus.
The Stoxx Europe 600 was slightly higher, while the FTSE 100 in Britain was slightly lower.
British local elections
The British pound rose more than 1 percent against the U.S. dollar and the euro after the results of Thursday’s local elections were confirmed. The Scottish National Party, which is pushing for a second independence referendum, fell one seat short of gaining an outright majority in its Parliament. But it will still govern with the support of another pro-independence party.
The pound’s gains on Monday were as much about the weak dollar as the election results, Kit Juckes, a strategist at Société Générale, wrote in a note. “I don’t know anyone who thinks the risk of a second Scottish referendum has gone away.” The pound can rise against the dollar because the U.S. currency “remains under pressure from global economic optimism,” he added.
The pound was at $1.41, the highest since February.
Consumer expectations for price inflation are ticking higher — but only when it comes to the near term, a fact that might make the move up less alarming for economic officials who are closely monitoring such measures.
Americans’ year-ahead inflation expectations rose to 3.4 percent in April, the Federal Reserve Bank of New York’s Survey of Consumer Expectations found, the highest level since 2013 and up from 3.2 percent in the March survey. At the same time, the outlook for inflation over the next three years held steady at 3.1 percent.
That discrepancy between the short- and longer-term outlook is roughly in line with what economists and central bank officials expect. Price gains are expected to pop this year, both for technical reasons as they lap very-low readings from last year and thanks to the economy’s reopening. Shortages are cropping up in many places as businesses try to readjust, temporarily pushing prices higher. But those increases are expected to fade with time.
Fed officials have been clear that they plan to look past short-lived increases and maintain cheap-money policies. Even so, higher 2021 inflation readings — including a consumer price inflation report set for release on Wednesday, which economists in a Bloomberg survey expect will show a big 3.6 percent gain from last year — are likely to keep attention focused on the incoming price data.
Inflation expectations are particularly important, because many economists believe that their stability at low levels has kept price gains contained in recent decades. When consumers expect only gradual increases, they may be less willing to accept big business price hikes.
The move up in the New York Fed’s short-term consumer inflation outlook comes at a time when some market-based inflation expectation measures are also increasing. So far, central bank officials have suggested that they aren’t worried, especially after years in which expectations drifted lower and price gains came in shy of the central bank’s goal of 2 percent annual gains.
“If we see inflation moving materially above 2 percent in a persistent way — that risks inflation expectations drifting up — then we will use our tools to guide inflation and expectations back down to 2 percent,” Jerome H. Powell, the Fed’s chair, said during a recent news conference. “This is not what we expect, but no one should doubt that in the event, we will be prepared to use our tools.”
The last person hired as the top editor of Teen Vogue resigned before her start date. Now, the wide-ranging Condé Nast online publication is trying again, with the announcement on Monday that Versha Sharma, a managing editor at the news website NowThis, will be its next editor in chief.
“Versha is a natural leader with a global perspective and deep understanding of local trends and issues — from politics and activism to culture and fashion — and their importance to our audience,” Anna Wintour, the global editorial director of Vogue and the chief content officer of Condé Nast, said in a statement.
Ms. Sharma, 34, was in charge of news and cultural coverage at NowThis, a site owned by Group Nine Media, the publisher of Thrillist, The Dodo, Seeker and PopSugar. She was part of a team that received an Edward R. Murrow award in 2018 for a documentary on the aftermath of Hurricane Maria in Puerto Rico.
She was named to the job nearly two months after Alexi McCammond, a former Axios journalist, resigned after more than 20 Teen Vogue staff members publicly condemned tweets she had posted a decade earlier.
Ms. McCammond’s old tweets included derogatory stereotypes about Asians and slurs for gay people. She had apologized for the tweets in 2019 and deleted them. She apologized again after they were resurfaced in March and resigned from the Teen Vogue job before her first scheduled day.
Asked about the furor, Ms. Sharma said in an interview, “I don’t really feel it’s my place to comment on that. All I can say is I share the values of the Teen Vogue staff and audience, and I’m very excited to work with them and work together moving forward.” She added that Teen Vogue “does a good job of showing how interconnected everything is, whether it’s fashion or politics or culture.”
Danielle Kwateng, Teen Vogue’s executive editor, published a note to readers in April acknowledging “the pain and frustration caused by resurfaced social media posts.” She added that the staff of the publication, which is known as much for its progressive stances and essays on social issues as its fashion and beauty coverage, would “evolve with our readers, because we can’t be the young person’s guide to saving the world without you.”
Ms. Sharma is on the board of the Online News Association and previously worked for TalkingPointsMemo, MSNBC.com and Vocativ. Her start date at Teen Vogue is May 24.
Is Elon Musk really taking Dogecoin to the moon? That’s what the Tesla chief executive has been pledging to do with the jokey cryptocurrency, mostly in terms of cheering on its skyrocketing price. But on Sunday, he tweeted that one of his other companies, SpaceX, is launching a satellite called Doge-1 on a mission paid for with Dogecoin, the DealBook newsletter reports.
SpaceX launching satellite Doge-1 to the moon next year
– Mission paid for in Doge
– 1st crypto in space
– 1st meme in space
To the mooooonnn!!https://t.co/xXfjGZVeUW
— Elon Musk (@elonmusk) May 9, 2021
The announcement came the morning after Mr. Musk dropped a few Dogecoin references as host of “Saturday Night Live,” at one point calling the token “a hustle.” Dogecoin, which is based on an internet meme about a Shiba Inu, fell by nearly a third in price on the night of the show. It was such an eventful night for the cryptocurrency that the Robinhood trading app couldn’t keep up. The crypto token is still up more than 10,000 percent in price this year.
SpaceX and Geometric Energy Corporation, a Canadian technology firm, are teaming up to carry a 90-pound satellite on a Falcon 9 moon mission, according to a statement on Sunday. “Having officially transacted with DOGE for a deal of this magnitude, Geometric Energy Corporation and SpaceX have solidified DOGE as a unit of account for lunar business,” said G.E.C.’s chief executive, Samuel Reid. (A company representative confirmed to DealBook that the project was not a joke but declined to explain further.)
Away from the memes and manias, the cryptocurrency industry is maturing, as shown by its growing contingent of lobbyists in Washington and a recent hiring spree of former regulators. This month, the House passed a bill backed by crypto lobbyists to create a working group to examine frameworks for regulating digital assets.
The bill, said Representative Stephen F. Lynch, Democrat of Massachusetts, was a chance “to act proactively toward financial innovation rather than to address gaps in our regulatory framework after the fact.”
The bill is now with the Senate Banking Committee. “Financial regulators have been slow when it comes to protecting consumers from private-sector digital assets that add more risks to our financial system,” Sherrod Brown of Ohio, the committee chair, told DealBook in a statement. He declined to provide a timeline for advancing the legislation.
As companies make plans to fully reopen their offices across the United States, they face a delicate decision. Many would like all employees to be vaccinated when they return, but in the face of legal and P.R. risks, few employers have gone so far as to require it.
Instead, they are hoping that encouragement and incentives will suffice, Gillian Friedman and Lauren Hirsch report for The New York Times.
Legally, companies seem largely in the clear. The Equal Employment Opportunity Commission issued guidance in December stating that employers are permitted to require employees to be vaccinated. But employers are still worried about litigation, in part because several states have proposed laws that would limit their ability to require vaccines.
“It would seem to me that employers are going to find themselves in a fairly strong position legally,” said Eric Feldman, a law professor at the University of Pennsylvania, “but that doesn’t mean they’re not going to get sued.”
So, companies are resorting to carrots over sticks. Darden offers hourly employees two hours of pay for each dose they receive. Target offers a $5 coupon to all customers and employees who receive their vaccination at a CVS at Target location. And many companies are hosting on-site clinics to make it easier to get vaccinated.
Others are experimenting with return-to-office policies that aren’t all or nothing. Salesforce will allow up to 100 fully vaccinated employees to volunteer to work together on designated floors of certain U.S. offices. Some companies are mandating the shots only for new hires.
Last week, the DealBook newsletter wrote about one of the most vexing issues facing boardrooms: Should companies mandate that employees get vaccinated before returning to the workplace? Many readers shared opinions, personal experiences and suggestions for handling this complex issue. Here is a small selection, edited for clarity:
“The way we’re doing it at our company is, if you submit a reason from your doctor or you have a religious belief or some other valid reason not to get the vaccination yet, you are required to be tested weekly and submit the results to H.R.” — Patricia Ripley, New York City
“We don’t know the long-term dangers of these vaccines. They may be bad or good. No one knows. Our employers should not be able to simply ignore any of our worries and concerns.” — Brandon Atchison, Verbena, Ala.
“I strongly support employer mandates. A few well-publicized firings will end the ‘hesitancy,’ but the firings must be backed up by classifying them as ‘for cause.’ That means no severance for executives and no unemployment for staff who refuse.” — Paul Levy, Carolina Beach, N.C.
“Individual rights are the cornerstone of American democracy — trampling them for the vaccine rollout is a dangerous precedent. People seem to forget that these ‘temporary changes’ end up as permanent, with the result that your employer can now compel greater access to your personal decision-making.” — Anonymous
“An unvaccinated person exposes everyone in the office, including visiting customers and clients, to the virus. Why should everyone else be jeopardized because of one person? Simply let unvaccinated people continue to work at home and suffer any consequences to their career paths that may result.” — Joseph Carlucci, White Plains, N.Y.
Norwegian Cruise Line is threatening to keep its ships out of Florida ports after the state enacted legislation that prohibits businesses from requiring proof of vaccination against the coronavirus in exchange for services. The company, which plans to have its first cruises available to the Caribbean and Europe this summer and fall, will offer trips with limited capacity and require all guests and crew members to be vaccinated on bookings through at least the end of October.
The operator of the largest petroleum pipeline between Texas and New York, which was shut down on Friday after a ransomware attack, would not give a timeline on Sunday on when it would reopen the pipeline. Colonial Pipeline, the pipeline operator, said on Sunday afternoon that it was developing “a system restart plan” and would restore service to some small lines between terminals and delivery points but “will bring our full system back online only when we believe it is safe to do so.”
The South Coast Air Quality Management District in Southern California on Friday adopted a rule that would force about 3,000 of the largest warehouses in the area to slash emissions from the trucks that serve the site or take other measures to improve air quality, The New York Times’s Hiroko Tabuchi reports.
Southern California is home to the nation’s largest concentration of warehouses — a hub of thousands of mammoth structures, served by belching diesel trucks, that help feed America’s booming appetite for online shopping and also contribute to the worst air pollution in the country.
The rule sets a precedent for regulating the exploding e-commerce industry, which has grown even more during the pandemic and has led to a spectacular increase in warehouse construction.
The changes could also help spur a more rapid electrification of freight tucks, a significant step toward reducing emissions from transportation, the country’s biggest source of planet-warming greenhouse gases. The emissions are a major contributor to smog-causing nitrogen oxides and diesel particulate matter pollution, which are linked to health problems including respiratory conditions.
A man in California who received more than $5 million in Payment Protection Program loans intended to help struggling businesses during the coronavirus pandemic was arrested on Friday on federal bank fraud and other charges after he used the money to buy a Lamborghini and other luxury cars, federal prosecutors said.
The man, Mustafa Qadiri, 38, of Irvine, was indicted by a federal grand jury on four counts of bank fraud, four counts of wire fraud, one count of aggravated identity theft and six counts of money laundering, the U.S. attorney in the Central District of California announced.
Federal prosecutors said Mr. Qadiri’s efforts to obtain federal loans started in late May 2020 and netted him nearly $5.1 million by early June. Mr. Qadiri is accused of using that money to go on a spending spree that included buying a Ferrari, a Lamborghini and a Bentley and paying for “lavish vacations,” all of which are prohibited under the Payment Protection Program, prosecutors said.
Online court records did not identify a lawyer for Mr. Qadiri, and efforts to reach him by telephone and email on Sunday evening were not successful.
The 2011 Ferrari 458 Italia can sell for more than $100,000, according to Cars.com, which says in a review that the vehicle “can perform as well as strain gawkers’ necks.”
Numerous people have been arrested and charged with misusing pandemic relief funds. Mr. Qadiri is at least the third person to face charges specifying the purchase of a Lamborghini.
Four people are facing nearly $70,000 in civil fines for clashing with airline crews over mask requirements and other safety instructions on recent flights, part of what the Federal Aviation Administration called a “disturbing increase” in the number of unruly passengers who have returned to the skies with the easing of pandemic restrictions.
The latest round of proposed fines, which passengers have 30 days to contest, came just days after the F.A.A. said that it had received more than 1,300 unruly-passenger reports from airlines since February. In the previous decade, the agency said, it took enforcement actions against 1,300 passengers total.
“We will not tolerate interfering with a flight crew and the performance of their safety duties,” Stephen Dickson, the administrator of the F.A.A., said on Twitter on May 3. “Period.”
None of the passengers now facing fines were identified by the F.A.A., which this year imposed a zero-tolerance policy for interfering with or assaulting flight attendants that carries a fine of up to $35,000 and possible jail time.
So far, the F.A.A. has identified potential violations in about 260 of the 1,300 cases referred by airlines, a spokesman for the agency said in an email on Sunday. Officials have begun enforcement actions in 20 of the cases and are preparing a number of additional enforcement actions, the spokesman said.
In 2019, before the coronavirus pandemic, there were 142 enforcement actions that stemmed from unruly passengers, according to the F.A.A. There were 159 in 2018, and 91 in 2017.
Today in the On Tech newsletter, Shira Ovide talks to Wirecutter’s Thorin Klosowski about what we can learn from Apple’s privacy labels, and how we can better protect our information.