Texas forced to have rolling black outs, primarily because of large declines in output from fossil fuel power plants

[Jeffrey Brown + 208]

EIA:  Texas natural gas production fell by almost half during recent cold snap

https://www.eia.gov/todayinenergy/detail.php?id=46896

During the cold snap that affected much of the central part of the country, U.S. dry natural gas production fell to as low as 69.7 billion cubic feet per day (Bcf/d) on February 17, a decline of 21%, or down nearly 18.9 Bcf/d from the week ending February 13. Natural gas production in Texas fell almost 45% from 21.3 Bcf/d during the week ending February 13 to a daily low of 11.8 Bcf/d on Wednesday, February 17, according to estimates from IHS Markit. Temperatures in Texas averaged nearly 30 degrees Fahrenheit lower than normal during the week of February 14.

The decline in natural gas production was mostly a result of freeze-offs, which occur when water and other liquids in the raw natural gas stream freeze at the wellhead or in natural gas gathering lines near production activities. Unlike the relatively winterized natural gas production infrastructure in northern areas of the country, natural gas production infrastructure, such as wellheads, gathering lines, and processing facilities, in Texas are more susceptible to the effects of extremely cold weather.

After reaching a daily low on February 17, natural gas production in Texas began increasing as temperatures started to rise. Daily production reached an estimated 20.9 Bcf/d on February 24, only about 0.3 Bcf/d lower than the average in the week ending February 13.

 

As Texans went without heat, light or water, some companies scored a big payday

https://www.washingtonpost.com/business/2021/02/27/texas-power-winners-losers/?utm_campaign=wp_post_most&utm_medium=email&utm_source=newsletter&wpisrc=nl_most&carta-url=https%3A%2F%2Fs2.washingtonpost.com%2Fcar-ln-tr%2F3030a4e%2F603a76119d2fda4c88f526e3%2F5adb7fb29bbc0f225b12df22%2F13%2F70%2F603a76119d2fda4c88f526e3

Excerpt:

As millions of Texans went days without heat, light or water, as store shelves were emptied, as deaths blamed on the cold began to add up, Texas’ frenzied and deregulated electricity market opened the door for some companies to reap windfalls that may mount into the billions of dollars.

The nation’s most deregulated energy economy was supposed to be a win for consumers and for energy companies nimble enough to do business in a bustling, cacophonous market. But the cold snap — rare but by no means unprecedented — shattered it last week, plunging consumers into misery and leaving a badly prepared and dislocated energy sector in pieces.

“This is the classic definition of market failure,” said Aneesh Prabhu, an analyst with S&P Global.

Wholesale prices for electricity spiked 300-fold, and for natural gas almost as much, and when supplies dwindled firms that had some of either commodity to sell were in line for tremendous short-term profits. But other companies are looking at stupendous losses.

Nearly $50 billion in electricity sales were carried out last week through the Texas organization that acts as a clearinghouse — as much as the three previous years combined — and now await a sorting out of who owes what to whom, which will determine the winners and losers. . . .

Exelon Corp., which has a small presence in Texas with two currently operating power plants, said Wednesday that when both plants went offline last week, it cost the company between $750 million and $950 million. The output of those plants represents about 2 percent of the state’s capacity. Christopher Crane, Exelon’s chief executive officer, said the company resorted to the high-priced spot market to meet its contractual obligations.

“This loss is not acceptable to us,” he said in a call to investors.

The company may consider pulling out of Texas, he added, unless its market is reformed.

Vistra, a major producer of electricity, announced Friday that it will suffer costs estimated at between $900 million and $1.3 billion because of the freeze.

“There were winterization issues at gas processing plants,” Curt Morgan, the company’s CEO, said at a state legislative hearing Thursday. "We’ve got 70,000 megawatts of dispatchable resources. We had 30,000 of that out, a huge amount.”

Subsidiaries of American Electric Power in Texas and Oklahoma, which was also hit by the cold, had to pay more than $1 billion for natural gas last week, roughly as much as was budgeted for all of 2021, Julie Sloat, the chief financial officer, said Thursday in an earnings call.

Edited February 27, 2021 by Jeffrey Brown

[Jeffrey Brown + 208]

Texas Power Market Is Short $2.1 Billion in Payments After Freeze

Electric retailers failed to make payments for power purchased when prices skyrocketed during the freeze, state grid operator says

https://www.wsj.com/articles/texas-power-market-is-short-2-1-billion-in-payments-after-freeze-11614386958?mod=hp_lead_pos6

Excerpt:

The financial consequences of the Texas blackouts are beginning to emerge in the state’s electricity market, with some players failing to pay for power they purchased last week and others disclosing sizable losses.

The Electric Reliability Council of Texas, which operates the state’s power grid, said Friday electric retailers had failed to make $2.12 billion in required payments, about 17% of the total amount owed for a stretch of last week.

Ercot, which collects that money and uses it to pay operators of power plants, said it would use $800 million in a revenue account to pay them for some of what they are owed but would be $1.32 billion short.

It also said it had initiated drawing collateral payments from the retailers who didn’t settle their bills, a sign that some may no longer be solvent.

An Ercot spokeswoman said she was unsure whether this was the total amount owed by retailers or more late payments would be disclosed later.

The shortfall in payments is set to trigger a bitter fight in Texas over how to cover the gap. In the rare instances when market participants cannot pay their bills, Ercot spreads the costs among remaining electric retailers, municipal power companies and others purchasing electricity.

This could put more strain on remaining retailers, some of whom are already balking at paying.

Denton, a city in North Texas that saw its energy costs skyrocket during the crisis, filed a lawsuit against Ercot, arguing that such extra payments were “an illegal and unconstitutional raid by [Ercot] on the credit of cities that operate electric utilities.”

In a statement, the city said it would “explore all legal options to protect the financial assets of the City of Denton and its ratepayers from improper use,” adding that it had obtained a restraining order against the nonprofit grid operator.

The costs of electricity in Texas soared last week when freezing temperatures forced numerous power plants of all types to trip offline, substantially reducing electricity supplies and causing millions to lose power for days.

As the crisis deepened, the state Public Utility Commission ordered market prices to go to the maximum level of $9,000 per megawatt hour until the end of the emergency, up from around $1,200 a megawatt hour at the time of its order last Monday. Prices remained at that peak price for about 90 hours. Previously, the Texas market had only hit that $9,000 level once, in 2019, for a total of three hours, according to a filing with the Public Utility Commission of Texas.

The result was a massive increase in electricity costs for retail electricity providers, local utilities, and ultimately, businesses and consumers in Texas, where power prices averaged $22 per megawatt hour last year.

 

The Texas deep freeze could force this energy company out of business (Just Energy*)

https://www.cnn.com/2021/02/22/business/texas-energy-company-loss/index.html

*Just Energy is a publicly traded company (TSX:JE, NYSE:JE) and serves 4.5 million customers collectively under its affiliate companies Just Energy, Hudson Energy, Commerce Energy, Tara Energy, Amigo Energy, Momentis and Hudson Energy Solar.

Excerpt:

New York (CNN Business)Electricity and gas provider Just Energy warned that the financial impact of the Texas winter storms could force it out of business.

Just Energy said Monday that it could lose about $250 million from Texas' deep freeze that left millions without power last week. The hit "could be materially adverse to the Company's liquidity and its ability to continue as a going concern," it said in a press release.

Canada-based Just Energy (JE) shares dropped more that 30% in early trading on the Toronto Stock Exchange.

The massive spike in energy demand during Texas' cold snap sent prices soaring. Just Energy noted that Texas energy prices were selling for as much as $9,000 per megawatt hour for much of last week -- the cap Texas' energy regulator imposed on the market. Prices had been around $50 a megawatt hour prior to the storm, according to Ercot, Texas' electrical grid operator.

 

Griddy customers moved to other electricity providers after ERCOT boots it from Texas market

https://www.texastribune.org/2021/02/26/griddy-texas-ercot-electricity-costs/

[Jeffrey Brown + 208]

"Hitting the Jackpot during the Texas cold snap"

In much the same way that residential users who were on Griddy contracts blew their entire annual budget (plus some) for electricity in one week, as noted above some power generators like American Electric Power blew their entire annual budget for natural gas in one week. On the other side of the natural gas trade were companies like Comstock Resources. 

An excerpt from the WaPo articled linked above:

"Comstock Resources, a company controlled by Dallas Cowboys owner Jerry Jones, also took advantage of the spike in natural gas. “We were able to get super premium prices,” Chief Financial Officer Roland Burns said in a Feb. 17 call with investors. "Comstock pushed sales in the energy market, he said, and “that’s going to pay off handsomely.” The cold snap that devastated Texas was “like hitting the jackpot.”"

[Jeffrey Brown + 208]

In any case, the key question is why--if we draw a line from Brownsville, Texas to the Canadian border--that the only widespread outages during the winter storm were in Texas?   I think that it is fundamentally a public policy failure. 

[Jeffrey Brown + 208]

Cold, dark and without drinking water: It can happen again if Texas leaders don’t act
https://www.star-telegram.com/news/politics-government/article249404450.html

Excerpt:

If there was ever a time for Texans to stand up and scream, this is it.

We nearly lost it all. Our state was within minutes of a power blackout that would have reduced Texas to a dark shell until at least March, sending families and businesses scattering for refuge the way Louisiana emptied out after Hurricane Katrina.

Arkansas, Oklahoma and Colorado would have been overrun by Texas refugees seeking heat and drinkable water. El Paso and Beaumont, both outside the state power grid, would have become Texas’ largest inhabitable cities. Jefferson, once East Texas’ bustling steamship port, would have boomed again.

Burglars and vandals would have ransacked the empty homes and businesses. Bodies would still be piling up, many at healthcare facilities plunged into darkness.

Now let me tell you what’s really scary.

Nobody can prevent this but the Texas Legislature. . . .

Former state Rep. Jason Villalba, a lawyer and Dallas Republican, has hope.  

“The Legislature never acts as quickly as they did about this,” he said.

But the same Legislature failed to do anything when warned after shorter 2011 Super Bowl ice storm blackouts.

“We should not lose sight of the fact that this is a direct result of the Legislature not acting in 2011 when it was clear there was a problem,” Villalba said.

“The Legislature needs to look deeply at its own culpability.”

Chris E. Wallace, president of the Irving-based North Texas Commission, said the Legislature can’t afford to leave Texas at risk.
“The question,” he said, “is how much will it cost and who’s going to pay for it?”

Whatever the cost, prevention is cheaper. . . . 

If you’re wondering where to start, I’ll spell it out:

1. Voters oversee natural gas utilities. We elect the misnamed Texas Railroad Commission.

2. The governor oversees electric utility regulation. He or she makes appointments to the way-too-cozy Texas Utility Commission, which in turn supervises that outside “reliability council” blamed for the not-so-rolling blackouts.

3. The Texas Legislature writes the state utility laws and spends the money.

4. Voters oversee the Legislature and governor. We vote again in primaries beginning Feb. 14, 2022.

You see where the buck stops.

[turbguy + 1,545]

7 hours ago, Jeffrey Brown said:

Cold, dark and without drinking water: It can happen again if Texas leaders don’t act
https://www.star-telegram.com/news/politics-government/article249404450.html

Excerpt:

If there was ever a time for Texans to stand up and scream, this is it.

We nearly lost it all. Our state was within minutes of a power blackout that would have reduced Texas to a dark shell until at least March, sending families and businesses scattering for refuge the way Louisiana emptied out after Hurricane Katrina.

Arkansas, Oklahoma and Colorado would have been overrun by Texas refugees seeking heat and drinkable water. El Paso and Beaumont, both outside the state power grid, would have become Texas’ largest inhabitable cities. Jefferson, once East Texas’ bustling steamship port, would have boomed again.

Burglars and vandals would have ransacked the empty homes and businesses. Bodies would still be piling up, many at healthcare facilities plunged into darkness.

Now let me tell you what’s really scary.

Nobody can prevent this but the Texas Legislature. . . .

Former state Rep. Jason Villalba, a lawyer and Dallas Republican, has hope.  

“The Legislature never acts as quickly as they did about this,” he said.

But the same Legislature failed to do anything when warned after shorter 2011 Super Bowl ice storm blackouts.

“We should not lose sight of the fact that this is a direct result of the Legislature not acting in 2011 when it was clear there was a problem,” Villalba said.

“The Legislature needs to look deeply at its own culpability.”

Chris E. Wallace, president of the Irving-based North Texas Commission, said the Legislature can’t afford to leave Texas at risk.
“The question,” he said, “is how much will it cost and who’s going to pay for it?”

Whatever the cost, prevention is cheaper. . . . 

If you’re wondering where to start, I’ll spell it out:

1. Voters oversee natural gas utilities. We elect the misnamed Texas Railroad Commission.

2. The governor oversees electric utility regulation. He or she makes appointments to the way-too-cozy Texas Utility Commission, which in turn supervises that outside “reliability council” blamed for the not-so-rolling blackouts.

3. The Texas Legislature writes the state utility laws and spends the money.

4. Voters oversee the Legislature and governor. We vote again in primaries beginning Feb. 14, 2022.

You see where the buck stops.

The lawyers are smiling...

[Jeffrey Brown + 208]

Texas Energy Co-Op Files For Bankruptcy After Storm, High Bill

https://www.npr.org/2021/03/01/972408584/texas-energy-co-op-files-for-bankruptcy-after-storm-high-bill

Excerpt:

The largest power cooperative in Texas filed for bankruptcy protection Monday, citing a massive bill from the state's electricity grid operator following last month's winter storm that left millions of residents without power for days.

Brazos Electric Power Cooperative filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas, according to court documents reviewed by NPR.

The company in court documents says it received an essentially unpayable $1.8 billion bill from the Electric Reliability Council of Texas, the entity that maintains and operates much of the state's electricity grid.

Brazos Electric is the wholesale energy provider for its 16-member cooperative.

Ratepayers and politicians have criticized ERCOT's leadership for failing to prepare for the storm. In the immediate days after the record-cold temperatures, customers reported exorbitantly high electricity bills. The organization is under investigation by Texas counties and the Federal Energy Regulatory Commission.

Dozens of other energy providers face enormous charges for electricity and other fees during February's freak winter storm in Texas. Many others may also face bills that list billions of dollars in charges.

[turbguy + 1,545]

16 minutes ago, Jeffrey Brown said:

Ratepayers and politicians have criticized ERCOT's leadership for failing to prepare for the storm. In the immediate days after the record-cold temperatures, customers reported exorbitantly high electricity bills. The organization is under investigation by Texas counties and the Federal Energy Regulatory Commission.

Ratepayers and politicians criticized ERCOT?

You gotta wonder why.  ERCOT was the HERO!

I think they need to criticize the politicians and themselves. THEY are the ones that are amongst the root causes.

[turbguy + 1,545]

And, from POWER (the oldest industrial magazine, launched in 1882):

“Most of those generators that went offline during the night, last night, were either—there a few additional wind generators that went offline during the night—but the majority of them were thermal generators, like generation fueled by gas, coal, or nuclear, And so most of the plants that went offline during the evening and morning today were fueled by one of those sources.”  

https://www.powermag.com/ercot-sheds-load-as-extreme-cold-forces-generators-offline-miso-spp-brace-for-worsening-system-conditions/

This is the only time I have seen some evidence that MSO and SWWP also shed load, although the rotating outages were shorter, and actually rotated.

 

 

[Jeffrey Brown + 208]

1 hour ago, turbguy said:

Ratepayers and politicians criticized ERCOT?

You gotta wonder why.  ERCOT was the HERO!

I think they need to criticize the politicians and themselves. THEY are the ones that are amongst the root causes.

I agree about the politicians, but the problem with ERCOT decreeing a maximum spot electricity price of $9.00 per kWh--versus a 2019 annual average of $0.022 per kWh and a pre-storm price of $0.05 per kWh--is that it appears that there was no additional generating capacity available at any price, especially with Texas natural gas production down by 45%. 

Edited March 1, 2021 by Jeffrey Brown

[Jeffrey Brown + 208]

57 minutes ago, turbguy said:

the majority of them were thermal generators

The chart up the thread shows the decline in output from natural gas, coal, wind, solar and nuclear powered sources. 

[turbguy + 1,545]

13 minutes ago, Jeffrey Brown said:

I agree about the politicians, but the problem with ERCOT decreeing a maximum spot electricity price of $9.00 per kWh--versus a 2019 annual average of $0.022 per kWh and a pre-storm price of $0.05 per kWh--is that it appears that there was no additional generating capacity available at any price, especially with Texas natural gas production down by 45%. 

Do not ignore consumers (a.k.a, "ratepayers"), had a large hand in the excessive peak demand.

As to pricing, I doubt consumers knew what was going on, otherwise they would have reduced consumption dramatically.  Sounds like a market failure to me, too.

Money and electricity don't match in a shortage.

Edited March 1, 2021 by turbguy

[turbguy + 1,545]

12 minutes ago, Jeffrey Brown said:

The chart up the thread shows the decline in output from natural gas, coal, wind, solar and nuclear powered sources. 

Majority...

[Jeffrey Brown + 208]

The Great Texas Blackout Was Caused by a Failure to Ensure Supplies of Natural Gas

https://www.texasmonthly.com/politics/texas-blackouts-natural-gas/?utm_source=Texas+Monthly&utm_campaign=b264867072-TM+Today+3-3-21&utm_medium=email&utm_term=0_92f99d7313-b264867072-53354267

[surrept33 + 609]

On 3/1/2021 at 3:34 PM, turbguy said:

Ratepayers and politicians criticized ERCOT?

You gotta wonder why.  ERCOT was the HERO!

I think they need to criticize the politicians and themselves. THEY are the ones that are amongst the root causes.

I agree. Life is all about tradeoffs. IMHO, a good leader takes the blame, and puts together a plan to build a more resilient system for next time. All I saw was deflection after deflection. ERCOT looks like the made the best of a nightmare situation. 

Compared to other countries, we have a lot of aging infrastructure (some of it is because we pioneered it first due to our resource wealth) and sometimes have market forces incentivizing the wrong things to save a buck. In a time when a lot of jobs need to be created, it seems like going on a building spree isn't necessarily the worst idea. It's more or less what China did in 2008. We don't want to be stuck in a "middle infrastructure income trap" usually exhibited in countries where there is a lot of uneven economic growth.  

I'm talking about the Texas grid, but more generally, the national grids. We're the only major country without a unified grid. IMHO, we need to look at it what a 21st century grid looks like in an era of more heterogeneous (and efficient) sinks and sources of energy and power.

[Gerry Maddoux + 3,627]

45 minutes ago, surrept33 said:

I'm talking about the Texas grid, but more generally, the national grids. We're the only major country without a unified grid. IMHO, we need to look at it what a 21st century grid looks like in an era of more heterogeneous (and efficient) sinks and sources of energy and power.

I disagree wholeheartedly. A unified grid basically degrades all oil and gas producing states to a second-tier status and elevates wind and solar to the forefront. A unified grid would relegate fossil fuels to a "peaker plant" status, used only when demand was strong or extraordinary. A state like, say, California, likes to call upon Wyoming for coal-fired utility plant electricity when things get tough. Then as soon as the crisis is over, they trash the living crap out of Wyoming. I personally think Wyoming needs to stand tall and say, the next time California calls, well sorry but we need the juice and we'll sell to you only at . . . 

Texas has had a whole bunch of jokers pile on, here on this site. Many have been from Great Britain, who has long forgotten that we, the United States of America, rescued them not once but twice. I have one particular thorn in my side in mind. It's very easy to pile on when you've just taken a dump in your mess kit.  

Well, Texas will be back. Oklahoma will be back. The Biden renewables project is destined to crash and burn. Do you really think we should be yoked to the Biden team when that happens?

 I don't. In fact, I don't want to be anywhere within a thousand miles of Mr. Biden and his solar and wind. I don't personally want to be within two-thousand miles of Washington, D.C. 

You might want to rethink this. Or at least state specifically what your intentions are. Don't pretend, for example, to be an oil and gas guy. Don't pretend to stand for what conservative America looks like. Not if you're going to talk like this. 

[Symmetry + 109]

47 minutes ago, Gerry Maddoux said:

 Many have been from Great Britain, who has long forgotten that we, the United States of America, rescued them not once but twice.

Fantasy.

 

[Gerry Maddoux + 3,627]

22 minutes ago, Symmetry said:

Fantasy.

You know, you really are a talented linguist. 

I'm surprised you haven't gone far. 

 

[surrept33 + 609]

1 hour ago, Gerry Maddoux said:

I disagree wholeheartedly. A unified grid basically degrades all oil and gas producing states to a second-tier status and elevates wind and solar to the forefront. A unified grid would relegate fossil fuels to a "peaker plant" status, used only when demand was strong or extraordinary. A state like, say, California, likes to call upon Wyoming for coal-fired utility plant electricity when things get tough. Then as soon as the crisis is over, they trash the living crap out of Wyoming. I personally think Wyoming needs to stand tall and say, the next time California calls, well sorry but we need the juice and we'll sell to you only at . . . 

Texas has had a whole bunch of jokers pile on, here on this site. Many have been from Great Britain, who has long forgotten that we, the United States of America, rescued them not once but twice. I have one particular thorn in my side in mind. It's very easy to pile on when you've just taken a dump in your mess kit.  

Well, Texas will be back. Oklahoma will be back. The Biden renewables project is destined to crash and burn. Do you really think we should be yoked to the Biden team when that happens?

 I don't. In fact, I don't want to be anywhere within a thousand miles of Mr. Biden and his solar and wind. I don't personally want to be within two-thousand miles of Washington, D.C. 

You might want to rethink this. Or at least state specifically what your intentions are. Don't pretend, for example, to be an oil and gas guy. Don't pretend to stand for what conservative America looks like. Not if you're going to talk like this. 

You're right that I'm not a "native Texan" (but I did live in Austin for a while, cool place, I've also worked for "big oil"). I think being so jingoist in one's state is silly (and usually ignoring history). I like Oklahoma, especially Tulsa, but I also can't ignore some of the ugly history.  People do that in California (Bear Republic!) and New York too. The best thing about the United States is that the states can each run "experiments" to see what works and doesn't work, and local jurisdictions more divisible than states can do so as well. But sometimes it makes sense to have some standardization (coordination) in practice (for example, within the electrical grid when communications technology allows us to communicate without sending each other carrier pigeons or horses to message each other). In fact, we can have electronics speak to each other over huge distances, as long as the power is on! So I am pro-experiments, anti-balkanization. 

I've spent a lot of time in both the Permian and the Eagleford and some time in rigs off the gulf, shared bread with many rural Texans (I love the people but am more than willing to criticize the reinvestment of oil/gas monies in rural communities - I didn't think most of the "booms" of the past had been invested wisely- you could literally see ghost towns from booms of previous decades in some places).

I saw Texas' mineral rights system create a lot of haves and have nots even in small communities. It was often luck of the draw and the wealth created often didn't seem to stay within communities, but flow to the "Texas Triangle" (Dallas to Austin to San Antonio to Houston to Ft Worth - or even New York City).  I saw a lot of investors get screwed by boom bust cycles. It wasn't really sustainable development, IMHO.

I think in hindsight, it would have better to have some system like this:

https://en.wikipedia.org/wiki/Alaska_Permanent_Fund

Or the Norwegian fund. 

In general, it's best to diversify (economically) because of the "resource curse". I see Texas cities doing this, but not rural areas (except for wind/solar). 

Edited March 4, 2021 by surrept33

[Symmetry + 109]

3 minutes ago, Gerry Maddoux said:

You know, you really are a talented linguist. 

I'm surprised you haven't gone far. 

 

Brevity is the soul of wit.

[Gerry Maddoux + 3,627]

1 minute ago, Symmetry said:

Brevity is the soul of wit.

Oh, I'm a fan of brevity. 

It's bullshit I have a problem with. 

[Gerry Maddoux + 3,627]

12 minutes ago, surrept33 said:

You're right that I'm not a "native Texan" (but I did live in Austin for a while, cool place, I've also worked for "big oil"). I think being so jingoist in one's state is silly (and usually ignoring history). I like Oklahoma, especially Tulsa, but I also can't ignore some of the ugly history.  People do that in California (Bear Republic!) and New York too. The best thing about the United States is that the states can each run "experiments" to see what works and doesn't work, and local jurisdictions more divisible than states can do so as well. But sometimes it makes sense to have some standardization (coordination) in practice (for example, within the electrical grid when communications technology allows us to communicate without sending each other carrier pigeons or horses to message each other). In fact, we can have electronics speak to each other over huge distances, as long as the power is on! So I am pro-experiments, anti-balkanization. 

I've spent a lot of time in both the Permian and the Eagleford and some time in rigs off the gulf, shared bread with many rural Texans (I love the people but am more than willing to criticize the reinvestment of oil/gas monies in rural communities - I didn't think most of the "booms" of the past had been invested wisely- you could literally see ghost towns from booms of previous decades in some places).

I saw Texas' mineral rights system create a lot of haves and have nots even in small communities. It was often luck of the draw and the wealth created often didn't seem to stay within communities, but flow to the "Texas Triangle" (Dallas to Austin to San Antonio to Houston to Ft Worth - or even New York City).  I saw a lot of investors get screwed by boom bust cycles. It wasn't really sustainable development, IMHO.

I think in hindsight, it would have better to have some system like this:

https://en.wikipedia.org/wiki/Alaska_Permanent_Fund

Or the Norwegian fund. 

In general, it's best to diversify (economically) because of the "resource curse". I see Texas cities doing this, but not rural areas (except for wind/solar). 

For a bright guy, you've just written just about the most socialistic piece that you could have penned. Of course there are winners and losers in the oil patch--that's been the case with panning for gold, discovering the internet, building a good running shoe. That is the jewel of capitalism. 

As for Oklahoma, what "ugly history?" There was the Tulsa Race Riot, if that's what you're alluding to--that wasn't such a charming bit of history. But it wasn't Tulsa's doing that led to the Trail of Tears dumping out right at their doorstep. Most of the Cherokees coming up their namesake trail brought along slaves--blacks or other Indians--and they treated them badly. It was a very rough place. Do you believe that Dickensian England was a nicer spot? Or that your ancestors and mine were really nice to each other during the Dark Ages? The world has always been a dog eat dog place and always will be. That's just the way it is.

People mostly work for a living. A few choice folks invent things, or grasp an idea and run with it. But that doesn't mean they should share their wealth with others. Hopefully, in a good world, they will give charitably, but if you want to see true greed look no farther than some of the Big Tech boys and girls, or even Baptist preachers in Houston. The oil field has no monopoly on greed. 

The United States has been successful because it is large and rambunctious, a place where people spread out and try their best to exploit riches from the land but also welcome others (legally). There is a lot of very dark history in any place. Do you think medicine is an entirely compassionate profession, where greed and power don't corrupt? Or missionary work? Well, think again!

Texas and Oklahoma have some of the best people in the world living in them. They are no better nor no worse than other states. Oklahoma, the state with the "ugly past," didn't whimper when the Supreme Court of the United States ruled that a child rapist should have been been tried by a Creek Nation court, and in the doing basically said that one-half of Oklahoma belonged still to the Creek Nation. How many Democrat states do you know that would have had such a verdict handed down? And how many of them would have accepted the verdict with grace?

Grow up!

[Ejam 0]

26 minutes ago, Gerry Maddoux said:

You know, you really are a talented linguist. 

I'm surprised you haven't gone far. 

 

I think I can expand on his behalf. You never saved anyone.

You attempted to stay on the sidelines and profiteer by selling munitions and supplies to both sides. When we ran out of money you kindly offered to keep supplying us in return for debt, leaving us in the knowledge that if we refused the Germans would take advantage of your offer instead and probably win the war(s).

Only when the Germans/Japanese started mass murdering your civilians did you reluctantly (and slowly) pick a side and help finish up. 
 

Particularly in WW1 the Germans were already defeated, attacking US merchant ships was their final act of desperation. They had observed you for years and came to the conclusion that you were so wholly reticent that they could probably sink your ships and that you still wouldn’t want to fight back. Ok they were wrong you finally declared war but only to save face.

[Dan Clemmensen + 1,011]

Texas consumes their dry gas as it is produced instead of storing it and then using it later. This makes Texas vulnerable to "freeze-offs", as as have now learned. California and Germany are not vulnerable to freeze-offs, not because of great foresight and planning, but because they import dry gas and store it in massive quantities. The Texas power failure was a uniquely Texan problem caused by an extreme weather event in a state that both produces and consumes massive amounts of gas.

This physical problem was exacerbated  by an over-reliance in market economics. Free and open markets are great, and in my opinion are the most efficient way to set fair prices. They are generally superior to any attempt at a controlled economy. However, institutions lose sight of the fact that commodity markets operate within physical limits, and you cannot extrapolate your production curves to beyond these physical limits. This happened last year when oil storage maxxed out, and it happened this month when demand for dry gas exceeded maximum supply AND simultaneously demand for electricity exceeded maximum supply. In a theoretical free market, increased demand results in increased prices which result in increased supply and reduced demand. In a real free market, these responses are constrained by reality. The financial managers at each producer contracted to deliver dry gas in specified amounts for specified prices, "knowing" that they might be forced to buy from competitors and sell as a loss to cover any shortage. Each producer acted rationally, trusting the market, but the system as a whole failed because all of those producers were implicitly counting on each other for backup supply, but they all went down because of they all suffered freeze-off. This is called a "common failure mode", and that is the bane of failure analysts everywhere.

Edited March 4, 2021 by Dan Clemmensen
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[Dan Warnick + 6,100]

3 hours ago, Gerry Maddoux said:

For a bright guy, you've just written just about the most socialistic piece that you could have penned. Of course there are winners and losers in the oil patch--that's been the case with panning for gold, discovering the internet, building a good running shoe. That is the jewel of capitalism. 

As for Oklahoma, what "ugly history?" There was the Tulsa Race Riot, if that's what you're alluding to--that wasn't such a charming bit of history. But it wasn't Tulsa's doing that led to the Trail of Tears dumping out right at their doorstep. Most of the Cherokees coming up their namesake trail brought along slaves--blacks or other Indians--and they treated them badly. It was a very rough place. Do you believe that Dickensian England was a nicer spot? Or that your ancestors and mine were really nice to each other during the Dark Ages? The world has always been a dog eat dog place and always will be. That's just the way it is.

People mostly work for a living. A few choice folks invent things, or grasp an idea and run with it. But that doesn't mean they should share their wealth with others. Hopefully, in a good world, they will give charitably, but if you want to see true greed look no farther than some of the Big Tech boys and girls, or even Baptist preachers in Houston. The oil field has no monopoly on greed. 

The United States has been successful because it is large and rambunctious, a place where people spread out and try their best to exploit riches from the land but also welcome others (legally). There is a lot of very dark history in any place. Do you think medicine is an entirely compassionate profession, where greed and power don't corrupt? Or missionary work? Well, think again!

Texas and Oklahoma have some of the best people in the world living in them. They are no better nor no worse than other states. Oklahoma, the state with the "ugly past," didn't whimper when the Supreme Court of the United States ruled that a child rapist should have been been tried by a Creek Nation court, and in the doing basically said that one-half of Oklahoma belonged still to the Creek Nation. How many Democrat states do you know that would have had such a verdict handed down? And how many of them would have accepted the verdict with grace?

Grow up!