Energy prices jump as millions left without power in Texas


Pump jacks operate in front of a drilling rig in an oil field in Midland, Texas.

Nick Oxford | Reuters

Energy prices jumped on Tuesday as a cold spell in the South both increased demand for fuel while simultaneously hampering production.

More than 3.8 million people were left without power across Texas on Tuesday morning, according to, as the electric grid couldn’t keep up with heightened demand, forcing utilities to implement rolling blackouts in some cases.

“The majority of heating needs are met via electrical baseboard of heat pumps in the southern region,” said John Kilduff, founding partner at Again Capital. “The demand for electricity, over the weekend, rivaled peak summer heatwave levels.”

Henry Hub natural gas futures jumped 6.7% to trade at $3.106 per million British thermal units. Gasoline futures advanced more than 4%.

“The storm that has crippled the Midwest and North East was much worse than expected,” said Jeff Kilburg, CEO at KKM Financial. “Frigid temps and speculators caught short are dramatically moving futures prices higher.”

The storm knocked out about 30 gigawatts of generation capacity, according to estimates from ClearView Energy Partners, just as consumers were driving up demand to heat their homes. Ultimately, there just wasn’t enough supply, forcing power companies to turn to the open market to buy electricity.

“Weather is severe enough to curtail supply when demand is near all-time high levels. Certain regional natural gas spot prices have shot up 10- to 100-fold in a matter of days,” noted analysts at RBC.

West Texas Intermediate crude futures, the U.S. oil benchmark, broke above $60 for the first time in more than a year on Monday, although the contract was trading shy of that level on Tuesday morning. Brent crude, the international oil benchmark, slid 21 cents to $63.09 per barrel.

Generating units across fuel types have been forced offline — including some wind production — and pipeline freezes are implementing the flow of natural gas and crude oil.

“The new outages will tighten supply for refined fuels as over 3 million barrels of capacity have been now hit,” noted Paola Rodriguez Masiu, vice president for oil markets at Rystad Energy.

“About 2.5 million bpd of capacity was shut between Houston and Louisiana, including the 600,000 bpd’s Motiva Enterprises facility,” she added, referring to the measurement of barrels per day.

Products You May Like

Articles You May Like

MPs to debate ‘Stormont brake’ as key part of new Brexit deal comes to the Commons
Russia and China are being driven together as the chasm with the West deepens
Quick Charge Podcast: March 21, 2023
Elizabeth Holmes owes over $25 million to Theranos, lawsuit says
Nicola Sturgeon ‘has not heard from police’ over probe into SNP finances

Leave a Reply

Your email address will not be published. Required fields are marked *