The Texas energy sector is still at struggle as it remains in deep freeze for a fifth day this Wednesday; major electricity outages are now just the top of the iceberg, as Houston’s shipping channel remains closed and at least a fifth of refining output is offline.
Now, almost half a million to 1,2 million barrels per day of crude oil capacity has also gone offline, specifically in the Permian Basin, one of the U.S. largest oilfields. According to analysts, it could take several more days or weeks for the energy sector in Texas to be fully restored.
Firstly, the arctic wind wave that hit Texas over the last weekend has killed 21 people and left millions of Texas residents in the dark. Also, as we reported previously, it has taken a blow on several states of Mexico, after the natural gas trade between the two countries was suspended.
Secondly, in both countries, electricity prices increased dramatically, to nearly 10,000% on Monday, in Texas; and 5000% in Mexico. Consequently, provoking a series of blackouts in order to balance the grid.
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Situation in Texas will remain for at least next weekend
On the other hand, this Wednesday, electricity prices in Texas continued to surge, and utilities now face a serious heating demand. According to Reuters, electricity prices, at the ERCOT hub, this Wednesday spiked to a record of $8,800 per megawatt-hour, which is nearly a sixfold increase from yesterday.
In addition, millions in Texas, particularly in Dallas and the Fort Worth region are locked in their homes, with no power and no heat. ERCOT said on Wednesday it had power utilities restoring power to nearly 600,000 homes; but 2,7 million are still in the dark.
Consequently, electricity, crude oil and gas prices have increased; particularly for gas prices, they kept rising more than 10% as of this Tuesday.
Finally, Citigroup analysts said, quoted by the news agency. “A production rebound could potentially take more than a week or two for the majority of oil and gas wells, but it might take longer for production from nearly all wells to recover.”