Devika Krishna Kumar, Scott DiSavino and Jessica Resnick-Ault, 06 May 2021
Natural gas suppliers, pipeline companies and banks that trade commodities have emerged as the biggest market winners from February’s U.S. winter blast that roiled gas and power markets, according to more than two dozen interviews and quarterly earnings reports.
The deep freeze caught Texas’s utilities off-guard, killed more than 100 people and left 4.5 million without power. Demand for heat pushed wholesale power costs to 400 times the usual amount and propelled natural gas prices to record highs, forcing utilities and consumers to pay exorbitant bills.
After the storm, few companies wanted to talk about their financial gains, unwilling to be seen as profiting off others’ hardships. But a clearer picture is emerging from quarterly earnings and as utility companies smarting from big bills sue to recoup their losses.
The biggest winners were companies with access to supplies, including leading energy trader Vitol, gas suppliers Kinder Morgan, Enterprise Products Partners and Energy Transfer, and banks Goldman Sachs, Bank of America (BofA) and Macquarie Group.
The firms combined stand to reap billions of dollars in profits by selling gas and power during the storm, according to interviews and reviews of public documents. It is possible that some companies may never collect on those sales due to ongoing litigation, however.
Losers include producers that could not deliver oil and gas due to frozen wellheads, gathering systems and processing stations. The week-long output loss cost shale producer Pioneer Natural Resources $80 million, Chevron about $300 million, and Exxon Mobil $800 million.
Utilities are complaining of price gouging and of unwarranted supply cancellations. The Federal Energy Regulatory Commission is reviewing gas and power markets for potential market manipulation.
Goldman Sachs and Vitol did not comment. BofA did not respond to a request for comment.