The New Threat to Oil Supplies: Hackers

Offshore drilling rigs are increasingly computer-dependent and remote-controlled. That could make them vulnerable to attacks from hackers from around the globe.

Earlier this year, a sullen, 28-year-old contractor in California was charged in federal court with sabotaging the computerized controls on oil-rig sitting off the coast, allegedly out of spite for not being hired full time. Prosecutors say the contractor hacked into a shore-to-rig communications network that, among other functions, detected oil leaks. He caused thousands of dollars worth of damage, they charge, though, fortunately, no leaks. 

A research team from the SINTEF Group, an independent Norwegian think tank, recently warned oil companies worldwide that offshore oil rigs are making themselves particularly vulnerable to hacking as they shift to unmanned robot platforms where vital operations -- everything from data transmission to drilling to sophisticated navigation systems that maintain the platform's position over the wellhead -- are controlled via wireless links to onshore facilities. 

The usual threat of a takeover of the massive oil platforms is in the form of seaborne raiders; Britain's Royal Marines commandos still regularly train for hostage rescue on rigs that dot the North Sea. But now, according to SINTEF scientist Martin Gilje Jaatun, with the advent of robot-controlled platforms, a cyberattacker with a PC anywhere in the world can attempt to seize control of a rig, or a cluster of rigs, by hacking into the "integrated operations" that link onshore computer networks to offshore ones. "The worst-case scenario, of course, is that a hacker will break in and take over control of the whole platform," Jaatun said. That hasn't happened yet, but computer viruses have caused personnel injuries and production losses on North Sea platforms, he noted.  

Today, most new oil-field discovery, such as off the coasts of Brazil and Nigeria, occurs in deep ocean waters. Work on the massive metal platforms towering hundreds of feet above the ocean is notoriously dangerous for the "roughnecks," and specialized labor costs, not to mention feeding, providing care, and keeping fleets of helicopters and boats on standby to evacuate rig crews in the event of fire or hurricanes, is hugely expensive for oil companies; hence, the move to robot-operated platforms.  

Although the newest oil rigs, which cost upward of $1 billion apiece, might be loaded with cutting-edge robotics technology, the software that controls a rig's basic functions is anything but. Most rely on the decades-old supervisory control and data acquisition (SCADA) software, written in an era when the "open source" tag was more important than security, said Jeff Vail, a former counterterrorism and intelligence analyst with the U.S. Interior Department. "It's underappreciated how vulnerable some of these systems are," he said. "It is possible, if you really understood them, to cause catastrophic damage by causing safety systems to fail."   

The list of potential cyberattackers includes ecowarriors aiming to jack up an oil firms' production costs, extortionists drawn to oil firms' deep pockets, and foreign governments engaging in a strategic contest for ever more scarce global oil reserves, Vail said. Insurgents, such as Nigeria's Movement for the Emancipation of the Niger Delta, which is waging a war against oil firms operating in that country's waters, could hire mercenary cyberwarriors to mount full-scale assaults on rigs in the delta. Despite obvious network vulnerabilities, oil firms have not made security a priority, said SINTEF's Jaatun, "leaving many of us feeling like 'chicken little' chirping on that the sky is about to fall." 

Oddvar Walle Jensen/AFP/Getty Images


What the World's Poorest Can Teach Us About Money Management

How can anyone live on just $2 a day? Economists are starting to find out.

For much of the last half-century, one of the biggest struggles in the poverty-fighting business has simply been knowing the audience. Who are the poor? Statistics tell us they are the 1.4 billion -- or about a fifth -- of the planet's 6.7 billion people who live on less than $1.25 a day. And 2.6 billion people live on under $2 a day. The numbers are already adjusted for purchasing power -- say, the number of pesos or yuan you would need to buy $1 worth of food, clothes, or medicine. So, in a world where a Starbucks coffee rings up at $4 a cup, how can so many live on so little?

Answering that basic question is fundamental to figuring out how governments, foundations, and charities can reduce poverty. But the economic lives of the poor -- their daily choices, opportunities, and constraints -- remain largely out of view of the policymakers and philanthropists who aim to help. After tracking the spending, borrowing, and yes, savings, of the poor across a full year in slums and villages, my colleagues' research reveals that the poor are often complex financial consumers. These "financial diaries" tracked penny by penny how families managed their money. And what we found is surprising: Many poor families are, arguably, far more adept at money management than even your average Western consumer. Offering them the tools to make saving and borrowing easier would go far to help the poor help themselves.

Those $1-a-day and $2-a-day figures might be partly to blame for why we've missed seeing the poor as sophisticated financial consumers. It turns out, such measures hide as much as they reveal. That $1 a day is an average, obscuring the reality that farm families may receive much more than $1 a day during peak harvest seasons but nearly nothing for a string of slow months. Rickshaw drivers and roadside vendors have busy weeks followed by terrible weeks. Their challenge is to make sure there is food on the table every day, not just on the days when income arrives.

Dhaka, Bangladesh, is home to some of the best examples. In one slum described in the study, most residents live on less than $2 a day and earn their way through a patchwork of odd jobs and self-employment. Hamid, for example, was a part-time rickshaw driver who was lucky to secure an on-again, off-again job. His wife, Khadeja, helped out by taking in sewing by the piece while she looked after their son. Between them, their family earned an average of $2 a day per person. Yet their financial diary reveals that, rather than living hand-to-mouth, Hamid and Khadeja -- and even similar families living on $1 day or less -- were borrowing and saving actively with an eye toward the future. Hamid and Khadeja used a wide variety of facilities to save, from contributing to Khadeja's microfinance bank account to simply asking a friend to safeguard some of their spare cash.

Such observations turn the assumptions that have been guiding policymaking for decades upside-down. They debunk the idea that typical poor families are living hand-to-mouth and are so desperate to meet subsistence needs that they are unable to exhibit much agency at all. And Dhaka is certainly no exception; in India and South Africa, everywhere the researchers went, poor families were living active financial lives, not despite being poor, but because of it.

One of the most striking findings is the extent of savings among the poor. Take the example of Nomsa, a 77-year-old woman in a South African township. Her daughter had died of AIDS, and Nomsa was caring for four grandchildren on a monthly government stipend of about $120. Still, she managed to save about $40 each month. Informal savings clubs were the key; Nomsa contributed a fixed amount to a communal pot each month in exchange for a big payout at the end of the year. For example, one of her clubs required $9 of savings each month, adding up to $99 by Christmas after 11 months. Elsewhere, others in the same community relied on local "deposit collectors" who earned their money by charging a fee for making daily visits, collecting a few pennies each time, and returning the accumulation at the end of the agreed-on period. For those of us used to earning interest on our deposits, it seems odd that people are paying to save. But given how valuable such a safety net is, and how hard it can be to accumulate, paying to use it makes sense. While the salaried members of the world's richer half take advantage of automatic payroll deductions to pension accounts, the poor are left to devise their own mechanisms. Ironically, it is these poor households -- who face the most financial risks -- who have the fewest reliable tools through which to save and prepare.

That observation helps us imagine a new and different future for microfinance, the global movement founded by Muhammad Yunus that offers microloans to jump-start local small businesses. Khadeja in Dhaka, for example, used microfinance loans to run her sewing sideline. But the financial diaries of the poor show that such a vision is too limited. Among Yunus' Grameen Bank customers, for example, the research found that more than half of the families in the sample mostly used the loans for things other than business. One such case was Ramna, a frequent user of "top-up" loans from Grameen, which allow borrowers to get a cash infusion by returning the loan balance to the initial loan size once they have paid some of it off. Ramna used her loans to buy food, stock up on grain for the coming monsoon season, pay down a higher-interest private loan, and pay for medical expenses, school fees and funeral expenses. Although Ramna's borrowing was not used for business enterprise, the value of such credit was clear.

Simple tools, like new savings accounts and loans for family emergencies, are now being introduced by microfinance institutions. Grameen Bank has introduced a new suite of such products that has proven so popular that the bank today takes in more in deposits than it lends out. Of course, no savings device alone is likely to take Hamid and Khadeja, Nomsa, or Ramna out of poverty. But better tools can do something perhaps more fundamental: help poor households make the most of what they currently have -- and offer reliable ways to cope with life's ups and downs.

Photo by Flickr user B. Sandman