While millions endured days of power cuts, producers contributed to fuel shortages
Power lines are seen after winter weather caused electricity blackouts in Houston, Texas, the US. Picture: REUTERS/GO NAKAMURA
And it is a big one: the total comes to about $11.1bn for a storm that lasted for just five days, according to estimates by BloombergNEF analysts Jade Patterson and Nakul Nair. What Abbott didn’t mention was the massive windfall key industry players made during the freeze. Energy Transfer posted its highest quarterly net income on record, more than three times its previous best quarter.
As the cold weather swept through west Texas, the state’s gas production tumbled by about 311-million cubic metres over nine consecutive days from February 9. Crucially, 52% of the drop in volume came before Ercot’s first power cut in the early hours of February 15, according to data compiled by BloombergNEF.
By Sunday February 14, the cold weather spread across the southern US. Natural gas hit $300 per million British thermal units in Texas, about 100 times regular levels, and a record $600 in Oklahoma. Traders began drawing comparisons to the records set on the Midwest grid in 1998, and to the California energy crisis that caused widespread blackouts in the early 2000s.Texas usually produces far more gas than it can handle.
The impact of gas shortages on rocketing prices was compounded by Texas’s pipeline system, which is controlled by just a few key players — among them Energy Transfer and Kinder Morgan, the same companies that made the biggest-known profits from the freeze. Furthermore, intrastate pipeline operators are not required to publish physical flows, putting customers at a massive disadvantage when it came to setting prices.
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