Arctic Blast Grips U.S., Upending Markets, Setting Records

Weekend Freeze to Set Records in U.S. as Energy Prices Spike

The Arctic blast sweeping the U.S. has unleashed winter weather from coast to coast, spawned deadly ice storms as far south as Houston and sent natural gas and power prices soaring to record levels. Conditions are set to get even worse.

Storm warnings and advisories stretch from Washington state in the west, south to Texas and up the East Coast to New Jersey. Across the central U.S., wind chill warnings and advisories cover most of the Great Plains and upper Midwest. Temperatures in Chicago could drop to -2 degrees Fahrenheit (-19 Celsius) Saturday and Sunday but the wind will make it feel closer to -25. After this system clears out, another will arrive by the middle of next week.

“It is not just the magnitude of the cold, it is also how persistent it is,” said Marc Chenard, a senior branch forecaster with the U.S. Weather Prediction Center. “We have about another week of this. There is another system behind this one impacting similar areas.”

While winter lashes the nation, it’s even reaching into areas that are usually spared the season’s worst. Texas is about to be barreled over by snow, ice and cold, and that has shaken energy markets.

Gas processing plants across Texas are shutting as liquids freeze inside pipes, disrupting output just as demand for the heating fuel jumps. Prices have surged more than 4,000% in two days in Oklahoma. Electricity in some parts of Texas have topped $5,000 a megawatt-hour. Meanwhile oil output in the Permian Basin, the biggest U.S. shale play, is moderating as wells slow down or halt completely.

Texas’s top energy regulator took emergency measures to ensure households, hospitals, utilities and other “human needs customers” get priority access to gas for furnaces. The Texas Railroad Commission’s staff warned that there will be “severe impact on the provision of energy resources” in coming days.

Gas is the primary fuel used in power plants in Texas. The state’s grid operator expects electricity demand will surge to a record for this time year as people crank up heaters. Average spot power prices in the state jumped more than 2,400% Saturday morning, to more than $4,200 a megawatt hour, according to data compiled by Bloomberg. If the average price remains at that level, it would be a record for the day.

Electricity for delivery in the hour ended 10 a.m. local time averaged $5,475.95 a megawatt-hour in Texas’s West hub, the highest in data going back to 2010.

As much as 6 inches (15 centimeters) of snow could fall in Fort Worth, Texas, over the weekend, with temperatures possibly plunging into the single digits Fahrenheit on Monday. Freezing rain has already created treacherous driving conditions there, with a 130-vehicle pileup on Thursday leaving six dead and dozens injured.

Slew of Records

Nearly 300 new daily temperature records could be set, mainly across the Great Plains from Canada to Texas through Tuesday, Chenard said. New York City will be dealing with ice and some snow showers from Saturday through Tuesday, with highs mostly hovering just above or below freezing.

“Conditions in Texas are the most extreme ever seen,” said Andy Weissman, chief executive officer of energy research firm EBW AnalyticsGroup. If gas production outages become widespread amid record cold, it “could become a dangerous situation.”

Arctic Blast Grips U.S., Upending Markets, Setting Records

For example, the temperature in Abilene, Texas, about 180 miles (290 kilometers) west of Dallas, could stay below freezing for eight straight days, which would be an all-time record, Chenard said.

The freeze marks the first deep chill this winter in the U.S., which until now had been spared the cold blasts that have plagued Europe and Asia and threatened to take down power grids there. U.S. gas production is already subdued after last year’s oil-price crash forced shale explorers to curtail drilling, and Texas’s grid operator is warning of record electricity demand.

Arctic Blast Grips U.S., Upending Markets, Setting Records

Furthermore, a series of winter storms will ride along the leading edge of the cold from the Pacific Northwest to the East Coast. That could bring 6 to 12 inches of snow across western Washington and Oregon, including Seattle, while ice and sleet could touch Houston before coming up the East Coast early next week.

Texas facilities operated by pipeline companies DCP Midstream LP and Targa Resources Corp. were reported shut on Thursday due to the cold, while Enbridge Inc. said it was limiting requests to transport gas on a pipeline stretching from Texas to New Jersey. Gas production in the mid-continent region is down 35% from the 30-day average, BloombergNEF said Friday. Meanwhile, as much as half a million barrels a day of output in the Permian Basin of West Texas may be impacted by well shutdowns.

Also See: Cold Blast in Texas Oil Patch Seen Leaving Barrels Trapped

In Oklahoma, prices for gas delivered into the hub closed at $377.13 per million British thermal units Friday. That compares with a $9 close on Wednesday. Prices began the week at less than $4.

Arctic Blast Grips U.S., Upending Markets, Setting Records

Related: Icy Blast Sends Gas Skyrocketing From Texas to Northeast

Chenard said the country can expect a mix of ultra-cold lows, with high temperatures that struggle to be anything but frigid. What makes the outlook all the more remarkable is that it’s the dead of winter, so the air has to really chill to set new marks.

Also noteworthy is how far into Texas the cold will get. Snow, sleet, and freezing rain could reach Houston late Sunday into Monday. In Lubbock, Texas, Monday’s forecast high will be 14 degrees Fahrenheit, which would shatter the old record of 30 for the date. Usually, any snowfalls in the region quickly melt, but the cold air will keep it around for days. Dallas hasn’t had a major winter storm since 2015.

According to Dan Pydynowski, a meteorologist with AccuWeather Inc., it all adds up to the state having its biggest chill since 1989.

“There is a direct discharge of Arctic air all the way down the plains right to Texas,” he said. “As the old saying goes, there is nothing between Arctic and Dallas but a barbed wire fence. So when you get a direct discharge like this it will go all the way.”

In addition, much of the area’s infrastructure is exposed, or cities lack the plows to clear roads quickly, said Jason Dunn, a National Weather Service meteorologist in Fort Worth. Even area airports may struggle to keep de-icing operations going to allow planes to take off safely.

©2021 Bloomberg L.P.