Grid Fail. The Energy Report 12/27/2022
By Phil Flynn On December 27, 2022 - 7:19 AM · In Market Commentaries, Phil Flynn Energy Report
The winter storm of the century hit and the death toll is rising. This storm has been made worse by green energy obsession. Short-sighted, ideologically driven anti-fossil fuel religion is increasingly damaging our economy and putting lives needlessly at risk. Force-feeding the country with energy sources that are not reliable in part was a factor in energy shortfalls causing a rolling blackout and shortages of natural gas. Many parts of the country are being forced to use electric heat that is vulnerable in extreme weather conditions. That, along with news that China is lifting covid restrictions, has oil and products breaking out to the upside suggesting that the recent price declines in gasoline and diesel are coming to a chilly end.
Rolling blackouts, calls to turn down thermostats, and winter deaths were part of America’s Christmas story. On Saturday Christmas Eve, Zerohedge reported that Con Edison is asking its 1.1 million natural gas, 3.5 million electric, and steam customers in the New York City Metropolitan region to conserve energy due to frigid weather. “Conserving energy as much as possible now will help ensure adequate natural gas supplies for the rest of the weekend,” Con Edison said.
In Wisconsin, WMTV reported that WE Energies is asking customers to turn down their thermostats Friday immediately after an “equipment failure” limited its ability to provide fuel. The company is asking users to turn their thermostats down to 60 to 62 degrees to avoid any outages after a system failure. Officials said turning down the heat should help all people stay warm and safe while avoiding any outages. According to WE Energies, the severe cold has made it difficult to compensate for one of their pipelines since everyone is using heat.
Bloomberg News that PJM, a vast electric grid stretching from Illinois to New Jersey, has declared a rare, system-wide emergency and ordered some customers to curtail demand as a vast winter storm sends power soaring. Grid operator PJM Interconnection LLC declared a Stage 2 emergency, which requires customers across its entire system who’ve agreed to curtail power during times of extreme need to do so. This is one of the last measures a grid manager can take to avoid a Stage 3 emergency, which has historically meant rolling blackouts are imminent or already in effect. Such widespread cutoffs would be devastating for as many as 65 million people relying on the grid for power just as an enormous winter storm batters swaths of the US and Canada.
NBC News reported that Families in western New York were scrambling to find food, medicine, and other essentials Monday after a historic blizzard blocked roads and cut off electricity, forcing many major supermarkets and pharmacies to close. In Buffalo, where at least 18 people have died, the two largest supermarket chains have been closed since Friday as the latest forecast called for another 6 to 12 inches of snow.
Fox News reported that power outages have also plagued the Empire State during the freezing weather. As of Monday morning, National Grid reported that 13,377 people had been impacted by outages, with 12,426 of them in Erie County. Poloncarz said that the number in Erie County is still down significantly from Sunday morning, when 26,404 were without power, “so good progress has been made.”
Yet despite the record cold, the damage from this storm should have been a lot less. The Wall Street Journal correctly pointed out in its editorial that, “The cascading grid stress came at an awful time but was all too predictable to anyone paying attention. The interconnected U.S. grid is supposed to be a source of resilience, but the government’s force-fed green energy transition is creating systemic vulnerabilities that politicians don’t want to acknowledge. Utilities and grid operators weren’t prepared for the surge in demand for natural gas and electricity to heat homes, which occurred as gas supply shortages and icy temperatures forced many power plants off-line.
The PJM Interconnection, which provides electricity to 65 million people across 13 eastern states, usually has surplus power that it exports to neighboring grids experiencing shortages, but this time it was caught short. Gas plants in the region couldn’t get enough fuel, which for public-health reasons is prioritized for heating. Coal and nuclear plants can’t ramp up like gas-fired plants to meet surges in demand, so PJM ordered some businesses to curtail power usage and urged households to do the same through Christmas morning. Rolling blackouts were narrowly averted as some generators switched to burning oil.
Americans in the southeast weren’t so lucky. The Tennessee Valley Authority and Duke Energy in the Carolinas ordered rolling blackouts as demand for heating surged. Two-thirds of the South relies on electricity for heating. While gas-power generation doubled in the TVA and tripled in the Carolinas, this wasn’t enough to keep the lights on and homes heated.
The Journal said, “While there wasn’t a single cause for the power shortages, government policies to boost renewables snowballed and created problems that cascaded through the grid. The North American Electric Reliability Corporation warned about these system-wide grid vulnerabilities in a report last month, as did a study commissioned by the Trump Department of Energy in 2017.”
Readers of The Phil Flynn Energy Report know that I have been a critic of some of these anti-fossil fuel policies for a long time. Not only because of the lack of investment in the grid and betting on energy sources that cannot be sustained, but also because of the lack of investment for future fossil fuels that will be needed. The succession with climate change needs to be balanced but still protecting lives, especially at times where they are most vulnerable to adverse weather conditions.
The combination of the cold weather and strong demand as well as the reopening of China, has supported the market reports that Japan will restrict travel from China because of their rising COVID cases This did seem to hurt the momentum just a little bit.
Natural gas prices are definitely going higher with the cold weather and strong demand. The problem of course is we can’t get enough natural gas to the places that need it. New York is banning new natural gas buildings and the green energy lobby is working to kill pipelines. I’m afraid that we’re going to have to get used to a country where the power grid becomes less reliable with every passing year.