Arctic frosts came to the U.S., and wholesale prices for gas and electricity went into “space” in the central and southern states. In Oklahoma, the price of blue fuel went up 10,000 times, and in Texas, electricity is sold at $5,000 per MW. The operator is offering consumers $100 each if they give up fixed rates and go to a competitor by Monday.
Central and southern U.S. states were unprepared for the arctic cold weather that hit the country, and wholesale electricity and gas prices rose thousands of times.
“After seeing North American WTI oil prices plummet to -$37, I thought nothing else could strike me. But today’s physical gas prices in the regional U.S. market are beyond comprehension. Oklahoma (OGT) gas prices have jumped to $500 per mBtu ($17,700 per thousand cubic feet) and have settled at $377 ($13,300). The increase is 10,795 times,” Bloomberg’s lead energy correspondent, Javier Blas, wrote on Twitter. He noted that at the regional hub Waha in West Texas, prices rose to $ 164 per mBtu ($ 5.8 thousand per thousand cubic meters).
Expert Bloomberg believes that the reason for the explosive growth in prices was the underdeveloped infrastructure of gas supply in the region.
NGI publication notes that the frost falls on the weekend and a four-day celebration of President’s Day, an explosive growth in prices for wholesale supplies of gas recorded at four other regional hubs in Arkansas, Kansas, Oklahoma, and Texas. NGI Director of Strategy and Research Patrick Rau explains that these are hubs at gas pipeline junctions where there are now “too many pipelines to suck gas in the face of reduced supplies.” RBN Energy, for example, reported that its production in the Permian Basin fell by 42 million cubic meters per day.
Meanwhile, one of Texas’ power delivery operators, VOLT, has offered to pay retail customers $100 each if they give up fixed-price rates and go to a competitor by Monday.
“The power system is facing a huge demand for electricity as frost hits the central and southern states. Texas operators are asking citizens to save power as wholesale prices hit $5,000 per MW,” said Javier Blas.
“I’m not sure even the definition of ‘black swan’ accurately describes what we’re experiencing right now,” one electricity trader wrote to Bloomberg reporter Rachel Adams-Herd.
Temperatures in Texas could drop as low as -19 degrees Celsius on Sunday night into Monday. These would be extreme temperatures for the Permian Basin, which could bring shale oil production to a halt, freezing pipelines, Javier Blas notes