Once-in-a-century blizzard hits Texas energy production shuts down a large area of semiconductor factories are forced to shut down

Recently, Blizzard swept the United States, Texas temperatures once dropped to minus 2 degrees Fahrenheit (- 19 degrees Celsius), the lowest since 1989. The blizzard has killed at least 31 people across the United States and cut power to about 4.4 million homes.

Also hit hard by Blizzard are Texas's local farming, animal husbandry, energy industry and even semiconductor manufacturing. This blizzard attack, not only the United States neighbors Mexico and Canada will be severely affected, the global industrial supply chain will also be affected.

The price of power outages for millions of people has directly increased by nearly 200 times.

According to federal statistics, Texas produces more electricity than any other state in the United States, almost twice as much as second Florida. However, due to outdated power supply equipment, almost all forms of local power supply-thermal power, wind power, nuclear power and solar energy-have failed in cold temperatures: some natural gas and coal-fired power plants have been shut down by a blizzard, wind turbines have been frozen and solar panels have been covered with heavy snow.

What is more deadly is that Texas, known as the "Lone Star State," uses the only independent power system in the United States, that is, its Electroweb is not connected to other states, so in the event of extreme weather such as Blizzard, most parts of Texas do not have access to electricity from other states.

At the same time, under the attack of the cold wave, people are in urgent need of electricity for heating, which has greatly increased the demand for electricity in Texas.

Texas electricity prices have skyrocketed under the extreme imbalance between supply and demand. At one point earlier this week, Texas wholesale electricity prices exceeded $10, 000 per megawatt-hour, according to (ERCOT), the Texas Power Reliability Council, which manages Electroweb. Earlier Wednesday morning, electricity prices exceeded $9000 per megawatt hour. The usual price of electricity is less than $50 per megawatt-hour.

Texas electricity prices soar rapidly

As the electricity and heating of the houses are cut off, people have to burn firewood to keep warm or hide in cars for the night. In the Houston area, a family has died of carbon monoxide poisoning after spending the night in a car, and there have been accidents involving the use of a fireplace for heating.

On Wednesday, local time, ERCOT said it had restored power to 600000 homes and businesses. But it also means that more than 3 million homes and businesses are still without power. Texas officials do not know when the power will be restored.

In December, Tesla CEO Musk, who moved to Texas from California, complained impolitely on Twitter that the Texas Power Reliability Commission (ERCOT) appeared to be unreliable.

Large area shutdown of energy production

Among the industries hit by Texas Blizzard, the first to bear the brunt is the energy industry. A large number of oil wells and refineries in Texas have been shut down and the transportation of natural gas and crude oil has been restricted because of power outages and frozen production equipment.

Texas is the largest state in the United States in terms of both crude oil and natural gas, according to the Energy Information Administration. As the home of America's top oil refineries, Texas produces about 4.6 million barrels of oil a day, accounting for about 40 percent of U. S. production. At the same time, the state produces about 1/4 of the natural gas produced in the United States.

However, Texas and Louisiana are shutting down about 2.5 million barrels a day of refining capacity under the influence of recent blizzards, according to Rystad Energy, an energy industry consultancy.

Motiva's Port Arthur refinery in Texas is the largest refinery in the United States, with a production capacity of 607000 barrels per day. The refinery was forced to shut down on Monday because of the severe cold. Also forced to close refineries are Valero Energy and Total, which closed their Texas plants of 335000 barrels a day and 225000 barrels a day, respectively. ExxonMobil also closed its two refineries in Texas with a capacity of 369000 b / d and 560000 b / d, respectively. In addition, the company's plant in Louisiana has suffered operational problems and could be closed at any time.

Restrictions on oil and gas transportation have affected neighboring countries

In addition to oil and gas production, oil and gas transport capacity is also limited by severe cold, and this impact has spread to the United States and even Mexico and Canada.

Under the influence of Blizzard, the Houston Terminal in Texas was forced to close at one time, leading to a shutdown of oil transportation. The cold weather has limited the capacity of natural gas pipelines in Arkansas, Illinois, Louisiana, New Mexico and Texas.

Enbridge (Enbridge), the pipeline operator, said the crude oil pipeline from Illinois to Cushing, Oklahoma, which has a capacity of 585000 barrels a day, has been disrupted due to a power outage. Cushing is the largest oil storage center in the United States.

As of press time, WTI crude oil futures rose to $61.72 a barrel, the highest since January last year, Brent crude rose above $65 a barrel, and natural gas futures rose 1.55 per cent to a new high of $3.292 since October last year.

In order to restore local power as soon as possible, the governor of Texas has banned the shipment of natural gas out of the state. The ban has a huge impact on Mexico, which relies heavily on oil and gas imports from Texas through pipelines. According to the latest data, more than 40% of America's natural gas exports come from Texas.

Tatiana Clouthier, Mexico's economy minister, said she had contacted the U.S. government's representative in Mexico to seek to secure Mexico's natural gas supplies during the cold spell.

"if you don't act together, the result may be more complicated," she said on Twitter.

Canada may be the beneficiary of this cold spell. Ian Archer (Ian Archer), an analyst at IHS Markit, said the blizzard soared Canadian gas exports to the United States to their highest level in 2010.

In the past few days, Canada's net exports have exceeded 7.5 billion cubic feet a day, and Archer estimates that net exports will be close to 8 billion cubic feet on Wednesday.

The semiconductor factory was forced to shut down

Austin, the capital of Texas, is known as the "Silicon Hill". Corresponding to California's Silicon Valley, there are also a number of high-tech enterprises. Due to power outages, some semiconductor factories near Austin have been forced to shut down, and the problem of "lack of core" downstream of the chip supply chain has been further aggravated.

On Wednesday, local time, NXP Semiconductor (NXP Semiconductor NV), one of the largest manufacturers of car chips, said it had stopped production at two of its plants in the Austin area. Infineon (Infineon Technologies AG) 's factory in Austin was also forced to close. In addition, Samsung Electronics (Samsung Electronics Co.), the world's second-largest semiconductor maker, said it also closed production at its Austin plant.

Carmakers around the world are slowing production because they cannot get an adequate supply of electronic components. Other electronics manufacturers, including Apple's (Apple Inc.), also said their growth was limited by parts shortages as demand rebounded from the recession triggered by the novel coronavirus crisis faster than many expected.

Animal husbandry is facing the crisis of running out of water and food.

Texas is one of the states that produce the largest number of livestock and poultry in the United States. However, severe cold and power outages are undoubtedly a serious crisis for Texas's animal husbandry.

As of December 2020, Texas farms had 2.9 million livestock, ranking first in the United States, according to the U.S. Department of Agriculture. In 2019, Texas's dairy industry ranked fifth in the United States, with about 613000 cows, and Texas's chicken industry ranked sixth in the country, with about 675 million poultry, according to the latest data from the U.S. Department of Agriculture.

As a result of this blizzard, many livestock were frozen to death in the severe cold. In addition, as animal feed processing plants are closed because of severe cold and water pipes freeze because of severe cold, livestock and poultry are forced to face shortages of food and water. Texas agricultural officials worry that livestock may have to be euthanized if they do not have access to water and food.

In the processing process, many milk processing plants were forced to close down because of the severe cold. Because milk cannot be processed, dairy farmers are forced to pour large amounts of milk into the fields.

"with no feed, no water, no heating, it's hard to get better," Texas Agriculture Commissioner Sid Miller (Sid Miller) said. As of Tuesday, local time, some rural areas in Texas had been without power for more than 30 hours.

Cotton and other planting industries have been hit hard.

As a major agricultural province, Texas is the largest cotton producing state in the United States. Texas cotton production area accounts for more than half of the cotton acreage in the United States and more than 45 percent of the total cotton output in the United States. Cotton is also the state's largest export of agricultural products.

Although most of the cotton harvest was done before Blizzard, Blizzard is fierce and cotton cultivation in Texas is likely to be affected next quarter.

Cotton acreage in western Texas is expected to decline by 60% and 70% in the next quarter, according to Atomm AgriLife, a local media report.

In addition to cotton, the cultivation of other agricultural products will also be hit hard. Under the influence of blizzard, a large number of seasonal fruits and vegetables were frozen, trees such as citrus fruits and pecans were frostbitten, and the land environment needed for grain cultivation such as oats and wheat deteriorated sharply.

"We will know in a few weeks whether the Blizzard damage will reach the level of 1989, but the current temperature is well below the minimum threshold for crop growth, and this will last for a long time-which is not good news for farmers," said Juan Anciso, a doctor of agriculture in Texas.

There were large-scale Blizzard in Texas in 1989, 2004 and 2011, among which 1989 blizzard caused serious damage to Texas agriculture.