Unless you are reading this newsletter from the shores of South Beach, chances are venturing outside entails donning multiple layers.
In Texas — the nation’s largest energy consumer — the arctic chill sweeping the U.S. has created an energy crisis now at fever pitch. As of last night nearly four million households were without power in Texas.
Grid on the Skids
The arctic blast has taken nearly 34,000MW of generating capacity offline in The Lone Star State, and electric grid operators have been forced to impose rotating blackouts:
- Freezing temperatures coupled with ice and snow have taken nuclear reactors, coal and gas facilities, and wind farms offline.
- Wind generation output alone was more than halved to 4.2 gigawatts, as turbines froze in the bitter cold.
The average spot price on the Texas grid hit the state’s $9,000 per megawatt-hour cap Monday morning — a 3,466% increase from Friday. That left wholesale power buyers assessing whether they could even afford their purchases.
“In our history as a grid operator, this is an unprecedented event,” said the Southwest Power Pool. Power cuts are expected to last into Tuesday.
Oil Industry Frostbitten
In addition to the millions left without power, the cold has massively disrupted Texas’ energy industry, cutting into the supply of gasoline and fuels. Oil production in the Permian Basin in the Southwest of the state dropped by 1 million barrels a day — that pushed U.S. crude above $60 a barrel for the first time in over a year.
The state’s industry is designed to handle blistering summers and not arctic chill. Among major facilities that had to shut down were Saudi Aramco’s Motiva Enterprises refinery in Port Arthur; Marathon Petroleum’s Galveston Bay plant; and Exxon Mobil’s massive Baytown refinery near Houston.
With over 150 million Americans over 2,000 miles in 26 states under winter weather advisories, you could say this is a Texas sized storm. At least you can chill a six pack of Shiner Bock or Lone Star in the front yard.