Recently a cyber-attack (ransomware by hacker group Darkside) damaged a major fuel pipeline to the east coast severely disrupting and halting its flow of 2.5mm bpd of diesel, aviation fuel, and gasoline. The region depends on the pipeline for almost half of its energy needs. Without a doubt, the shutdown spells shortages and higher prices for fuel.

There are three questions without clear answers:

1) How long will the outage persist?

2) How much more damage is out there? Is this the first of many such outages to come?

3) What are the potential 1st and 2nd-degree effects of the stoppage?

Increasingly our critical infrastructure is under cyberattack.
From banking to utilities to energy transport, if it is critical, it is under attack.
Recent months have shown how vulnerable the world is to disruptions, be it shipping through the Suez Canal, or just the lack of semiconductor chips available for modern automobile production. The supply disruptions can cause distortions in economic output. And as we have seen in the recent labor report, well-intended social policies (stimulus payments and robust unemployment benefits) also have the unintended consequence of disrupting labor supply, and hiring trends are the proof.

The bottom line is we are suddenly seeing, the terms “shortages” and “outages” starting to appear more frequently and this will have an undesirable effect on inflation as consumers and employers all compete for scarce resources, services and output.

Over time, these supply chain events taken in aggregate will influence market participants' (consumers) mindset and the seeds of an inflationary cycle are born.
With disruptions more common, and government distorting labor markets,-combined with rising prices and too many dollars chasing too few goods,….we may be seeing a return of the Hyper-inflation problems from the 1970s.

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