and unprotected lands. The systems are frequently controlled remotely, relying on supervisory control and data acquisition (SCADA) systems. Each system also has certain unique characteristics. Electricity cannot be stored for use when needed, whereas oil and natural gas products can be stored in limited quantities near points of use (thus lessening the impact of a shortage if the supply is interrupted). Also, oil products can be imported from overseas and transported by a variety of modes. Another important difference is that the refineries for converting crude oil into its large family of products are generally very large and complex facilities, located in just a few areas of the country, while the electric generating facilities come in a great range of sizes and are widely distributed throughout the nation. While some oil and gas operations generate their own power, most are highly dependent on electricity for their operations. In turn, about one-fifth of all electric power is generated from natural gas and oil products.

Analysis of possible targets, weapons, and delivery systems and of direct and indirect consequences reveals several very dangerous scenarios. The scenarios of greatest concern involve the electrical system. When service is lost, there are immediate consequences to every person, home, and business. An extended outage of electricity would have profound consequences.

Natural gas supply is also vulnerable, but the use of gas is not as universal as that of electricity. The oil sector has several vulnerable points, but, as noted above, it has backup alternatives. Coal is the least vulnerable and will not be considered in this analysis.

Several recent trends in the energy industries have increased the vulnerability of their infrastructures and made serious loss of service from terrorist attack more likely. To improve efficiency of operations, there has been a rapid increase in the use of automation and computerization; therefore each industry now relies heavily on information management and telecommunications systems. Low margins and various competitive priorities have encouraged industry consolidation, with fewer and bigger facilities and intensive use of assets in place. With no new refineries having been constructed since 1978, average refinery operation is at 93 percent of capacity (EIA, 2001). Control is more centralized, spare parts inventories have been reduced, and subsystems are highly integrated across the entire business. Few or no personnel at key facilities (i.e., electric substations and pipeline pumping stations), congested transmission corridors, and increased reliance on unsecured telecommunications and SCADA systems are common. (SCADA systems are also discussed in Chapter 5.)

This economic and competitive setting has led to reduced investment in system capacity and technology development. For example, annual additions to electrical transmission capacity declined 60 percent in the 5-year period 1990-1995, as compared with 1985-1990. The result is increased reliance on technology developed by vendors and increased outsourcing of key functions such as maintenance and security.

The electricity sector also is changing fundamentally as it incorporates more



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