Energy prices may rise due to bad weather in U.S.
2022.12.24 11:45
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Energy prices may rise due to bad weather in U.S.
Budrigannews.com – Friday’s bitter cold and strong winds cut off power and energy production across the United States, driving up the cost of heating and electricity as people got ready for the holidays.
About two-thirds of the United States were affected by Winter Storm Elliott, which brought sub-freezing temperatures and extreme weather warnings. In some areas, the cold and snow continued throughout the Christmas holiday.
Oil refineries in Texas cut gasoline and diesel production due to equipment failures, and heating and power prices increased as a result of the losses. More than 1.5 million homes and businesses were without power. There were freeze-ins that affected oil and gas output from North Dakota to Texas, reducing supplies.
Due to the bitterly cold temperatures, approximately 1.5 million barrels of daily refining capacity along the US Gulf Coast was shut down. Although they are unlikely to last, the production losses have raised fuel prices.
TotalEnergies, Motiva Enterprises, and Marathon Petroleum (NYSE:) were all eliminated. structures outside of Houston. Exxon Mobil (NYSE:) was also disrupted by the cold weather. Valero Energy and LyondellBasell (NYSE:) plants in Texas that manufacture jet fuel, diesel, and gasoline.
The Cameron LNG plant in Louisiana owned by Sempra Infrastructure claimed that the weather hampered its liquefied natural gas production without providing any specifics. It stated that workers at the 12 million tonne facility were attempting to restore output.
This week, production in North Dakota’s oilfields was reduced by 300,000 to 350,000 barrels per day, or one third of normal, as a result of freeze-ins, in which ice crystals stop the production of oil and gas. According to El Paso Natural Gas operator Kinder Morgan Inc. (NYSE:), the freeze caused more gas to be withdrawn from the Permian oilfield in Texas than was injected.
Friday saw a 2.4% increase in U.S. benchmark oil prices to $79.56, and next-day gas prices in west Texas increased by 22% to approximately $9 per million British thermal units, the highest level since the state’s deep freeze in 2021.
Texas’s grid power prices also shot up, reaching $3,700 per megawatt hour. This caused generators to add more power to the grid before prices dropped as thermal and solar supplies came online.
The bulk power provider in New England said it expected to be able to meet demand, but strong winds caused outages mostly in the Southeast and Midwest; More than 187,000 people in North Carolina were without power.
Duke Energy (NYSE:) states, “Crews are restoring power, but high winds are making repairs difficult at most of the 4,600 outage locations.” on Twitter, spokesperson Jeff Brooks wrote.
Heating oil and soared dramatically in the face of the cold. Natural gas futures were up 2.5%, while U.S. futures were up 4.3%.
Friday’s gas price at the Algonquin hub in New England increased by 361 percent to $30 mmBtu, close to an 11-month high.
Gas-fired power plants generate about half of New England’s electricity, but during the coldest months, power generators switch to using more oil. As of midday on Friday, 17% of power companies’ generation came from oil-fired plants, according to grid operator New England ISO.
As wells frozen in Texas, Oklahoma, North Dakota, Pennsylvania, and other locations, gas output decreased by approximately 6.5 billion cubic feet per day (bcfd) over the past four days to a preliminary nine-month low of 92.4 bcfd on Friday.
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That is the largest reduction in output since the Texas power outage that affected millions of people in February 2021.
About 5 million homes in the United States could use one billion cubic feet of gas per day.
