Mid-February in Texas is supposed to bring 50-degree temperatures, hunting, and barbecue. Instead, a snow & ice storm left millions without warmth and shelter.
We're trying out a new series called "Tuesday Tidbits." I'll break down what's going on the business world, why it's important, and why you should care.
Let's start with a heavy-hitter, and something that's been taking the nation by surprise. Nearly all of Texas has been impacted by two massive winter storms from February 10th to 17th, leaving the Lone Star State in shambles. With over 4.5 million homes and businesses without power, some for more than a few days, this marks the largest power outage in Texas history.
So what went wrong, and what's happening now? Let's dive into our first edition of Tuesday Tidbits: Texas edition.
Texas was left in shambles after sub-freezing temperatures and feet of snow in mid-February. Picture: The Texas Tribune
The Breakdown: For many across the nation, winter storms are just part of the routine from December to March. But in Texas and other southern states, even a dusting or thin sheet of ice could spell major trouble. Winter Storms Shirley and Uri rolled through the Lone Star State and left mayhem in its tracks; each storm dumped a significant amount of sleet and ice all across the state. It caused widespread flooding, car accidents, and house fires; all which contributed to 70 confirmed deaths. The video below went viral as the storm unfolded: it captures a pile-up on I-35 in Fort Worth.
How'd It Happen? Texas loves its independence, its freedom, and its separation from federal government. While its revolutionist nature typically would slow societal progress relative to other US States, Texas surprisingly is quite ahead of the energy game and shift to powering our grids from renewable sources. There are three grids that power the entire United States with more than 160 million miles of high-voltage lines; the Eastern, the Western, and the Texas Interconnections. The Texas grid is run by the Electric Reliability Council of Texas, commonly referred to as ERCOT; it is beyond the jurisdiction of any federal agency in order to avoid regulations, and as such, the Texas grid doesn't have to remain up to the regulatory standards of the rest of the nation.
In large part, this has worked pretty well for Texas. They've actually outpaced most of the nation in progressing towards more renewable energy sources, such as wind turbines and solar energy. In comparison to the rest of the United States, ERCOT has saved the average Texan more average utility spend.
The downside? Texans still don't see value in "unnecessarily" spending taxpayer money, so something has to give. In both 1989 and 2011, federal agencies recommended a large winterization project for gas lines and wind turbines in Texas to avoid energy crises in the winter months, as their grid is much more susceptible to operational issues when exposed to sub-freezing temperatures. But, you guessed it: Texans (and ERCOT) didn't see the need to spend money on something they didn't feel they needed. As such, everything that could've gone wrong basically did: wind turbines locked up, natural gas lines froze, and energy demand skyrocketed more than any provider could offer. Early estimates indicate that the Lone Star State could be down $19 billion in damage, and counting. If Texans don't like spending any extra money on things they don't feel they need, they're not going to want to see this.
The Reactions: Power outages and gas shortages are never great for a state that many businesses have been flocking to due to an abundance of land, renewable energy, absently low taxes, and a below-average cost of living. GM, Toyota, and Nissan all halted operations at most of their manufacturing facilities while they weathered the storm. A handful of Walmart locations temporarily shut its doors in the DFW, Austin, and Houston areas. Airlines cancelled more than 4,000 flights to and from Texas since Monday, February 10th. Most notably, Texas senator Ted Cruz decided to bring his family to Cancun to wait out the cold...he played it off as "being a good father," much to the dismay of many of his constituents.
Why should I care? If you don't have any strong opinions on the below, the situation in Texas can help you develop one.
COVID vaccine rollouts were affected. Ever had someone at work try to make small-talk by asking if anyone in your family's been vaccinated? Fear no longer; you now have something to talk about without divulging your family's health info! The COVID-19 vaccine was originally ahead of schedule in Texas, but due to the conditions in the storm, state officials admit there were some instances in which they had to rush doses into people's arms in order to not let them spoil. Now you'll be able to almost "wish" you were in Texas to get one sooner...or not.
The stock market dipped. The performance of financial markets should be something every person should at least be conversational in, regardless of if you're in business or not. In general, it's a good indicator of economic conditions both at home and abroad. Although we saw the Dow Jones Industrial Average (an index commonly just "The Dow") remain fairly consistent, other stocks took a temporary tumble. NRG Energy ($NRG), a large energy provider in the Houston area, fell nearly 15%, while Just Energy Group ($JE) fell nearly 30 points. Energy is becoming an attractive industry to buy stock in, so now you finally have a recommendation when one of your die-hard day-trading friends asks what you're eyeing.
Read up on renewable energy. Odds are that you know someone (or that person knows someone) who is passionate about climate change. For those that don't have an opinion on what the United States needs to do next in its journey to build sustainable infrastructure, this is a great time to educate yourself on the pros and cons of shifting to a renewable energy-based energy ecosystem. This breakdown from the Detroit Free Press is a great place to start.
Hope you enjoyed this new series. I'll be posting business-related content on LinkedIn every Tuesday, and maybe more if you're enjoying it.