The deep freeze that afflicted the center of the US last week caused massive power outages in Texas and surrounding states. The plight of millions without power and heat captured the headlines and attracted world-wide attention.
In the meantime, other energy-related disruptions triggered by the same weather events remained largely unnoticed, despite the fact that any of one of them would be on the list of biggest US energy disruptions ever:
• As much as 4 million barrels per day (Mb/d) of US oil production was shut-in, nearly 40% of domestic crude supply, with the Permian basin especially impacted;
• Nearly 6 Mb/d US Gulf Coast refining capacity was shut-in (roughly 30% of the national total);
• Up to 20 billion cubic feet per day of US natural gas production was shut-in (20% of total production);
What little discussion there was of shortages at gasoline stations and of natural gas outages, was in the context of the power outages. (The gas stations couldn’t pump fuel due to power outages, and natural gas is the leading fuel for generating electricity nationwide, including in Texas.)
The headlines clearly show that power outages are what gets peoples’ and media attention.
It’s easy to see why: The personal tragedies caused were horrific as power outages crippled daily lives of Texans and other states irrespective of their status or wealth!
Electricity truly is the lifeblood of modern civilization.
It is the largest source of energy used by American consumers and businesses—larger than oil. And it’s especially important for US families—nearly three times bigger than the next-largest (non-transport) source of energy for US households (natural gas).
As we saw last week, electricity is also the leading source of energy for essential services in our homes and communities, including hospitals, nursing homes, offices and stores: heating, cooling, cooking, refrigeration, communication.
Moreover, the impact of a power outage is instant. For oil, if you turn off supply, the fuel tanks will run low over a period of time, in large part because it takes time to move it around the world, process it, and get it to consumers. Moreover, oil can be stored, with large inventories throughout the value chain, including in your car’s fuel tank. (And the industry’s commercial inventories are supplemented in a crisis by the federal government’s strategic stockpile.) In contrast, power cannot be stored on a useful scale today, even for brief periods. Because electrons travel at the speed of light, an outage instantly results in loss of power – and with that power, the necessities and conveniences of modern life.
And yet, if you play word association & say “energy security”, people generally think of oil.
Why?
Well, there’s history: In the early 1970s, oil was the dominant energy source for the US, at its peak, reaching nearly half of total energy use; today it’s still the largest source of energy but closer to 35%. Moreover, we have been long been dependent on oil imports (as we are still today, even with the shale revolution). People of a certain age (mine!) remember the embargoes, disruptions and “gas lines” of the 1970s. Those disruptions were accompanied by soaring prices, deep recessions, job losses, and wholesale changes in American industry. Indeed, oil has been seen as a geopolitical leverage point for a hundred years (including/especially in times of war). Some people also argue that volatile world oil prices are an additional security risk.
Because of this history, the US and its allies have spent 50 years building a robust domestic and international capability to deal with oil security risks. We have a strategic stockpile and plans for emergency measures to conserve fuel and switch to other energy forms; we have treaty obligations to share information and supplies with our allies in a crisis. One country—Saudi Arabia—even commits to maintain a buffer of spare production capacity to help manage unexpected outages.
Historically, power markets haven’t remotely received the strategic focus of US policymakers that we have seen for oil, with a more technical focus until recently on maintaining “reliability”. Most importantly, this is because the US is self-sufficient (with some modest connections to grids in Canada and Mexico). An outage in Europe or Asia doesn’t impact power markets here. There was little sense of threats to the US power grid.
But that may be changing. Security of course is all about reliability for the power sector…and changes coming for the US and global system will make it even more so in the future.
Critically, our vulnerability to power outages will grow in the future because the role of electricity in our energy mix will continue to grow. Indeed, a major objective of climate policy is to displace fossil fuels with (green) electricity. So, the role of electricity in our economy will grow over time along with the number of electronic devices in our lives…as will our intolerance of outages. And we need that exposure to grow if we want to successfully address climate change. This will reduce our vulnerability to oil disruptions, but will also bring its own set of challenges. Many of these risks also apply to other energy sources, but remember: Power is the energy source that’s growing in importance!
Most importantly, our home-grown power grids are increasingly vulnerable to cyber attack (we have seen attacks on power systems here in the US as well as massive attacks in countries such as Ukraine). It was only a few years ago that the Energy Department elevated the status of its program to defend the US power grid (and other critical domestic energy infrastructure) from cyber threats.
Additionally, our power supply is highly vulnerable to disruption from events in the natural world: in addition to last week’s freeze-related outages, we have seen significant outages in recent years due to hurricanes and wildfires. Indeed, many scientists believe climate change means we should expect more, and more frequent, extreme weather events. As with so many parts of our economy, the vulnerability of the power sector is increased by struggles to pay for aging infrastructure, especially in the face of rapid growth of intermittent renewables that are often far from demand centers and cannot be ramped up during periods of peak demand.
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