Headlines in the US were still dominated by two words Thursday: “Texas” and “freeze.”
In addition to leaving dozens dead and millions without power, America’s abrupt energy crisis knocked out some 4 million barrels per day of oil output. So, nearly 40% of US production capacity.
Brent touched $65 Thursday, a 13-month high, before giving some back. The figure (below) is just a 30,000-foot view that captures the prevailing market zeitgeist, dominated as it is by the reflation narrative.
Drilling down (no pun intended) into the Texas story, Governor Greg Abbott may have stepped on the Constitution by moving to ban natural gas providers from selling supplies out of state. Arguably, he can’t do that.
“I hereby mandate that all sourced natural gas be made available for sale to local power generation opportunities before leaving the state of Texas,” he declared, in a letter to the Texas Railroad Commission. The ban would last through Sunday. Abbott called on the regulator to “immediately take all reasonable and necessary steps to ensure [the] mandate is carried out.”
Once again, Abbott found himself torn between protecting the public and beating back criticism that he’s exercising undue executive authority. Consider the following brief excerpts from an article published last summer by a local ABC affiliate:
Governor Greg Abbott’s mandatory mask order was not even an hour old, and Houston attorney Jared Woodfill was already drafting the paperwork to sue.
“Every time Governor Abbott issues what we believe are unconstitutional mandates or orders, as he describes them, we believe it’s appropriate to challenge them,” Woodfill told ABC13. It will be his seventh lawsuit filed against elected officials over executive orders issued during the pandemic.
The former Harris County Republican Party Chairman believes all of them violate people’s rights. “If we can put a mask order, then why can’t we force people to also wear gloves? Why can’t we force them to wear hazmat suits? Where does it end? Where does government’s role end?” he asked.
That’s clearly ridiculous, and you won’t be surprised to discover that Woodfill is back at it, this time to defend — I don’t know — people’s Constitutional right to freeze to death?
In remarks carried by Bloomberg, Woodfill called Abbott’s gas order “an abuse of the Texas Disaster Act.” “It’s amazing that there are no limits in Abbott’s mind to what his authority is,” Woodfill said. “He’ll take as much power as the courts and the Legislature will let him have.”
Abbott is thus a lot like most Texans right now — he’ll “take as much power” as anyone “will let him have.”
In the same linked piece, Bloomberg said the confusion created by the governor’s announcement caused a West Coast-based trader to lose $1 million “within minutes.”
Mexico isn’t amused either. Mexican Economy Minister Tatiana Clouthier reached out to Charge d’affaires John Creamer, in order to “avoid industry being affected and to guarantee natural gas supply.”
Interruptions in supply to Mexico forced work stoppages at factories earlier this week. Andres Manuel Lopez Obrador is capitalizing on the crisis to push for energy nationalization.
Mexico “had been able to largely restore electricity distribution by Wednesday by supplying fuel oil to power plants while ordering purchases of liquefied natural gas, including from suppliers in Texas,” Reuters wrote, adding that “the ban on out-of-state shipments sought by Abbott raised tensions once again.”
Clearly, this is a debacle of epic proportions. In addition to underscoring humanity’s precarious relationship with Mother Nature (which should be the takeaway for Americans) it has ramifications for Texas’s political future.
“With the state reeling from [the collapse of the power grid], Democrats have mobilized public anger over the Republicans’ oversight of the energy industry, opening a new front in their battle to erode the party’s dominance of every statewide office and both chambers of the legislature,” The New York Times wrote, in a good piece that’s well worth a read, or at least a skim.
As for markets, Anna Lenzmeier, an energy analyst at BTU Analytics who spoke to Reuters, summed up the near-term outlook. “The second half of this week is shaping up to be just as tumultuous as the long weekend,” she remarked.
13 thoughts on “In Texas: A Debacle”
It’s all in support of liberty!
“Rick Perry says Texans would rather go without electricity than give the federal government more power over them”
Published: Feb. 17, 2021 at 5:49 p.m. ET
Inre masks, Perry also says Texans would rather die than give the federal government power over their lives, because when you’re dead…freedom! Or something…
In FERC regulated areas an application is submitted to FERC requiring thousands of pages of documentation to show that events such as what happened in Texas cannot occur for the power plant that is proposed. Evidently Texas in their infinite wisdom has chosen not to require new plants to be capable of handling all climate and fuel supply conditions. So a rational person with could as, did problems that Texas had did they also occur in the same way in ferc regulated areas? The answer to that question is no.
My guess of the future is that people will be referencing what happened to Texas for quite some time. It could ignite a trend to designing a better grid production system at a time when we are looking to make major changes. I see nothing but silver lining in this. Evidently Abbott and his Republican cohorts see something opposite for their futures.
I’m following all this keenly, locally, since my family and I are scattered all around Texas. I’ve been scanning the press response and all the blaming and pontificating that’s just ramping up. Interestingly, while there is a political divide in assigning causes and suggesting fixes, apparently no one in Texas – at all – is suggesting “why don’t we connect up to the rest of the US so we could just buy the power?” Even the relatively liberal Dallas and Austin papers limit their political slant to fending off criticism of renewable sources and the Governor’s alternate-facts depiction of what went wrong. But connect up and submit to FERC? Sigh. Texans collectively decided we’d rather let 40,000 of us die than get serious about mere masks. If one tried to debate surrendering the Lone Star Grid, you wouldn’t even be able to see your opponent because of all the Texas flags waved in your face.
“Amigo” Rick Perry, former secretary of Energy who abruptly and controversially resigned his post, should be investigated for his role in the Ukraine quid pro quo that led to Trump’s 1st impeachment. My advice to Rick, … lay low, amigo…
Thoughts and well wishes to the people of Texas, … and where there is crisis may opportunity follow,
…but first we must resolve the crisis…
An aspect of Texas obvious to some observers is the “plantation politics” and the application of this politics on, and acceptance of it by, Whites. Will be interesting to see how Whites in Texas react politically to this debacle.
A more subtle change in our nation’s future, assuming we can even remain a federation of united states, is that Texas can no longer can be held up as an example to others for how to govern a state.
Thoughts and prayers for all the thirsty freezing people that left overregulated California for freedom in Texas. NOT!
This case study in mismanagement and denial of reality will make people think twice before moving there, for sure.
The executive order to stop gas exports is a little worrying. Could states stop the exports of goods produced within their borders? What happened to free markets for gas, and oil? Actions like these harm the idea of national unity.
So, now Texas wants federal disaster aid for burst pipes and a bailout from the coasts? They benefitted from their no regulation cheap electricity for years. Maybe they should impose a special charge on electric users to pay for their idiocy of not preparing their grid for winter. They are libertarians and don’t believe in handouts right? And they paid artificially low rates due to the lack of spending on winterization and paying for backup capacity. And now they want a blue state bailout? Maybe they should join modernity and interconnect with the rest of the country, and have to comply with FERC regulations in exchange. Is Texas electric system any better than Puerto Rico Electric Power now? Not really and they should be made to pay something back for their stupidity. Or maybe at least they could be a bit more humble when other areas of the country suffer from a virus or a hurricane or 9/11 and not whine about helping out others. Ted Cruz and Governor Abbot should be eating humble pie right about now.
And once upon a time George HW Bush claimed residency in a Houston hotel in order to skirt paying state income taxes…
Isn’t it about time for Texas to get some stones and secede? They keep threatening so let ’em go. Apparently one of their senators would rather be in Mexico, anyway. By the way, the wholesale price to buy electricity from the grid has touched the cap of $9000/kvh. A look at one’s bill will show that’s a tad high but the same as CA experienced a few years back when they decided to try to buy wholesale.
I do believe that the wishes of industry in Texas and potential new industries in Texas will have a say on whether or not to connect. Amarillo and El Paso escaped this disaster in large part because they are connected to adjacent regions of other states. I promise you that both of these cities would use that as a selling point to potential industries scouting them out, in the future.
Also the Texas Panhandle at least Amarillo and northward was largely “winterized” out of necessity, a long long time ago.