FMOSE BUCHELE, 10 May 2021
The blackouts that hit Texas in February left more than 100 people dead and caused billions of dollars in debt for those who found themselves on the wrong side of the state’s famously laissez-faire energy market. For others, it created huge earnings the full scope of which are now coming into focus.
Until recently, companies that made a lot of money during the freeze have tried to keep a low profile about it. But quarterly financial reports have come due making that information harder to conceal. The big winners: companies that sold natural gas.
During the blackouts both electricity and gas were in short supply, and both could be sold at a premium. The price for wholesale electricity in Texas is capped by state regulators. There is no such market control for gas, which increased hundreds of times its normal value.
That price hike let companies like BP, Kinder Morgan and Energy Transfer make billions. Big banks that had invested in electricity and gas contracts before the freeze, like Goldman Sachs and Bank of America, also cashed in.
The size of the profits has led some to question whether price gouging took place.
“If a gas station raises prices from $2 to $5/gal during a hurricane they go to jail for price gouging,” UT Professor Michael Webber posted on Twitter after the blackout. “If a natgas provider raises prices from $2 to $200/MMBTU during a cold snap even though their costs didn’t materially change, that seems just fine with Texas authorities.”