freeze-offs

If you’re reading this, it means you’ve got access to power and internet. Count yourself among the fortunate today. Rolling blackouts and brownouts across the middle of the country and in Texas, have disrupted businesses and lives. It’s been particularly brutal in the Lone Star State. Electricity and natural gas are commodities that are so basic to our way of living that it’s easy to take for granted the efforts designed to make them reliable, available, and affordable. But, boy, does it make things difficult when they don’t show up as anticipated. In today’s blog, we discuss the factors behind the supply disruptions that are wreaking havoc in these commodity markets.

Physical natural gas spot prices in the U.S. Midcontinent trading as high as $600/MMBtu, while Northeast prices barely flinch – that was the upside-down reality physical traders were contending with Friday in trading for the long weekend, with Winter Storm Uri bearing down on large swaths of the Lower 48 and spreading bitter-cold, icy weather from the Midwest and Northeast to Texas and the Deep South. The record-shattering, triple-digit spot prices, mostly all west of the Mississippi River, were indicative of some of the worst supply shortages the market has seen during the generally oversupplied Shale Era, or ever. But the East vs. West price divergence also marks the culmination of years of shifting gas supply and flow patterns that have redefined regional dynamics. The market will be digesting the various impacts of this still-unfolding event for days, but some of the effects and implications can be gleaned already from daily pipeline flows. In today’s blog we provide an early look at the market impacts of the polar plunge.