The rare severe cold weather pushed up energy demand, forcing Texas grid operators to announce alternate power outages. At least 4.7 million homes and businesses in the central region of the United States went out of power on Monday (15th). North America’s largest oil refinery suspended operations, and even Mexico was affected. The cold air going all the way south is brewing an energy crisis. Affected by the power outage, West Texas oil prices have also reached a new high since the outbreak.
Electricity demand on the Texas grid reached a new high since the beginning of winter on Sunday evening. In order to protect the grid, the U.S. grid operators supplying electricity to 14 states from North Dakota to Oklahoma require power companies to implement alternate power cuts to prevent the grid from collapsing due to the surge in demand.
The Southwest Power Company (SPP) issued a statement on Monday, saying: “This is an unprecedented incident since we started operating the grid.”
The temperature in Texas is as low as minus 22 degrees Celsius. Snow has fallen in Houston, the largest city in Texas, from Sunday. Many highways have been closed due to icing, and Houston Airport has been temporarily closed.
U.S. largest oil refinery suspended operations
Motiva Enterprises suspended operations at its refining facility in Port Arthur, Texas. This is the largest refinery in the United States with a daily production capacity of more than 600,000 barrels.
According to sources, Valero Energy and Total’s refineries in Port Arthur also suspended operations, with capacities of 335,000 barrels and 225,000 barrels, respectively. Exxon Mobil (XOM-US) Also closed its refineries and chemical plants in Texas, and its refineries in Louisiana were also blocked due to power outages.
The cold air all the way south came to most of the Gulf of Mexico, Oklahoma and Missouri that were not used to the cold weather. In addition, at least 400,000 households and business users in Mexico have power outages, and power plants must suspend operations due to a shortage of natural gas due to power grid interruptions.
At present, about 60% of users affected by the power outage have restored power. US President Biden provides federal assistance to Texas.
However, the weather forecast shows that Houston may have its lowest February temperature in 122 years on Tuesday morning. In addition, Texas will encounter another winter storm this week, which means that severe cold weather and road icing will continue for several days.
WTI rises to new high since January 2020
Texas is a major energy town in the United States and home to several large global oil and gas companies. This power outage highlights that climate change has made the planet face more unpredictable weather patterns and must be overcome in the process of moving from fossil fuels to renewable energy. The vulnerability of the power grid.
The cold current swept through Texas threatening oil supply, the daily output of Texas Permian Basin crude oil decreased by 1 million barrels, and West Texas Intermediate Crude Oil (WTI) broke through 60 per barrel on Monday USD, The highest touched 60.77 USD, Is a new high since January 2020.
Brent crude oil rose 1.3% on Monday to 63.26 a barrel USD, It also hit a 13-month high earlier and recovered 60 USDInteger levels. Both WTI and Brent have risen more than 20% this year.
Crude oil analyst Andy Lipow said: “Winter storms and Arctic air masses are heading south to Houston, which may have a severe impact on the crude oil industry. Extremely freezing weather means that many oil wells may be closed because freezing water can also cause equipment to freeze. This severe cold has already affected oil production in Canada and the United States in North Dakota, Oklahoma, Texas and other places.”
U.S. gasoline prices have recently risen steadily, which may also be related to winter storms.
Lipow said that although winter storms are not as powerful as a Category 5 hurricane hit by the Gulf of Mexico, there is still a high chance that oil refining will slow down production.
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