Background
Recently an Ice Age-like storm consumed Texas and pushed its electrical grid to the precipice. If not for the rapid reaction of energy operators to shut down these systems, Texans would have found themselves in a perilous Mad Max landscape.
Despite this near miss, operationally Texas was transformed into a temporary failed state leaving 14 million residents without safe drinking water whose source comes from 1,000 public water systems while millions more had no electricity. Shockingly with a bit of clever editing by even rank video amateurs, one could swear the photos of suffering Texans were citizens in war-torn Syria.
Mother nature took down the grid more effectively than any rogue or state sponsored hacker or terrorist. The destruction to infrastructure far exceeded Hurricane Katrina (2005) and Hurricane Sandy (2012) which were impacted more harshly because they were coastal communities from ocean-borne storms.
For this reason, Texas, as America’s energy mecca, in a present-day world of surfeit oil and natural gas inventories due to a paucity of economic activity, was unable to deliver limited energy within the state itself. It’s analogous to the scene in the iconic movie Chinatown (1974) when the coroner quipped to private investigator Jake Gittes (Jack Nicholson) the irony of the water commissioner drowning during a drought.
The following chart entitled Texas Struggles Amid Crippling Blackouts provided by PowerOutage.us and presented by Statista, an online statistical firm, is a state-by-state comparative analysis of customers disconnected during the nationwide winter storm.
Self-Made Energy Alamo
Texas’ electricity grid is called the “Texas Interconnection” of which 75% of its electricity is managed by the grid operator Electric Reliability Council of Texas (Ercot). Texas is the only state which does not have inter-state electrical connectivity, a status which Texans decided since the early 20th century. For this reason their grid requires no federal oversight. Furthermore this meant that like the infamous battle at Alamo that began 23 February 1836, the winter storm which ironically began around the same time on 14-15 February 2021, no one could come to their rescue.
Because of deregulation Texas residents receive competitively retail priced electricity, slightly below the national average. However, according to the US Energy Information Agency (EIA) the average Texas resident’s electric bill is higher than the national average because their average monthly consumption is higher than the national average. The average nationwide monthly electric bill is $115.49 versus the average monthly Texan’s bill of $134.07.
For the purposes of understanding the breadth of the crisis the following is a chart entitled How Texas Generates Its Electricity provided by Ercot and presented by Statista.
Texas-Size Psychological Stress | “Houston, We Have a Problem”
Rarely mentioned specific to Texas is the elevated severe psychological stress. Texans are more accustomed to blistering heat waves and the ensuing energy problems rather than severe cold. Extreme weather hot or cold can cause the same energy outages but the former is far better experienced. Finally, far fewer Texans are properly prepared with Arctic conditions to cope with respect to winter clothing, blankets, etc. For example with respect to large urban cities the average winter temperature range in Dallas is between 41-61 degrees Fahrenheit and for Houston it’s between 45-60 degrees Fahrenheit.
“The Limits of Control”
In defense of utilities, even an unlimited budget will always be surpassed by unlimited meteorological power. In a world of stupefying self-entitlement and psychological snowflakes, there’s an utopian illusion that there exists the perfect business model, blessed by government, enabling the community to withstand any force majeure event and cover every contingency while providing uninterrupted level of service at competitive prices.
On a personal level, imagine yourself falling heads over heels over an affordable property located in a well-known historical flood zone. You know the risk and are willing to purchase the property along with more than enough flood insurance. Furthermore you’re also informed that historically there are mild earthquakes that occur once every 50 years so you buy earthquake insurance – at a far cheaper premium because of its low probability of occurrence. Wouldn’t you know it a massive earthquake hits causing damage that exceeds your earthquake insurance.
Well a similar event happened in Texas. Increasingly brutal heat waves are the historical norm however extreme winter storms occur far less often, the last occurring in February 2011 and the one before that in 1989. Can you imagine the press and public outrage over the millions spent on the “winterization” of facilities if there are no winter storms but severe heat waves? It’s akin to purchasing a goose-down coat for that occasional freakish cold snap as a resident of a Caribbean island instead of more SPF protection cotton shirts, pants and hats. Whether governmental, private or personal, it’s budgetary real politik.
Sclerotic Status Quo
How will Ercot and Texas political leadership mitigate present-day, near and far-future infrastructure vulnerabilities?
· The long-term multi-billion dollar requirement to upgrade and harden an aging infrastructure against particularly against winter storms which occur infrequently will be discussed but never undertaken. Why?
· A technical bankrupt state and deeply politically divided federal government which nullifies such funding.
· Accepting “free” federal money, if offered and available, would establish a lethal political precedent with respect to federal government mandates and inevitably open the floodgates to future federally-mandated and controlled projects. In others words a loss of independence and control called state sovereignty.
· Texas is one of the reddest of red states before it was red. Even if it was blue, Texas is Texas and always will be – independent and answerable to no one. State sovereignty plus.
· Ercot will craft a brilliant, non-binding plan in their public relations campaign without doing anything operationally substantive, perhaps only changing/modifying crisis management protocols, because of the aforementioned reasons and guaranteed negative return on investment - a corporate pushback.
In other words, nothing will be done even if Texas, or hell, whichever comes first, freezes over. Literally. Going forward for Texas and everywhere else, it’s not a question of solving the problem, rather containing the crisis.
“Brace for Impact” | Economic Vulnerabilities
The implications when the grid and other systems collapse will be catastrophic. The magnitude of the Texas electrical grid failing for an extended time is mind-boggling. Consider the following:
· Texas’ gross domestic production (GDP) of $1.887 trillion qualifies as the world’s 9th largest economy behind Italy’s $2 trillion and ahead of Brazil’s $1.8 trillion. Furthermore the 2020 arrival or expansion of operations from Amazon, CBRE, Tesla, HP and Oracle to Texas has considerably increased the size of Texas’ economy. Its collapse will crush the American economy in a myriad of ways along the efficient yet vulnerable supply chains which rely on energy.
· Texas is America’s energy mecca and energy producing powerhouse that was left temporarily impotent by mother nature. America went from energy self-sufficiency to energy-dependent on imports overnight. An economic contagion would spread almost immediately.
· These vulnerabilities are not unique to Texas but are now manifesting into economy-killer events that occur in states with essential, country-size powerhouse economies. We are in a cycle of more severe and frequent storms which will adversely impact an aging infrastructure whose series of blackouts, brownouts and other outages are an added burden to America’s economic recovery.
“Brace for Impact” | Crowd Control Chaos
· According to Ercot executives Texas was minutes away from a total grid collapse which would have resulted in limited or no power for months until replacement parts were installed in a myriad of electrical substations and other facilities. The B-movie “just in time” rescue prevented an inevitable societal collapse. Imagine a population of almost 30 million residents – similar to that of Ukraine - with no power, no electricity, no fuel, useless supply chain for food deliveries – a monumental humanitarian crisis would ensue.
Texan society would revert to a “frontier” survivalist mindset and a violent one at that as citizens would devolve to their primal instincts for survival armed with lots of firepower and the formation of neighborhood militias directed by local warlords. Imagine a Texan version of the original apocalyptic movie Mad Max (1981) that interestingly took place in Australia, a similar geographic landscape.
For this reason a prolonged state of emergency situation could ignite a powderkeg. The link to the following chart entitled Gun Ownership by State (2021) presented by the Pew Research Center provides nationwide gun ownership. Gun ownership from Texas’ population of almost 40 million is 35.7%. This translates to 10.71 million gunowners averaging 18 guns per gun owner. Total registered guns are 588,696, the key word being “registered”.
Probably no one can sum up the dire possibilities of a grid failure anywhere in the US better than the late yet prescient George Carlin’s skit of a world without electricity. Carlin mentions it would take two years for us to return to the Stone Age but the darker truth is that it would take a mere two weeks.
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The Cerulean Council is a NYC-based think-tank that provides prescient, beyond-the-horizon, contrarian perspectives and risk assessments on geopolitical dynamics and global urban security with counter-intuitive solutions.