Texas freeze becomes global oil market crisis
Production halts, and large refinery offline
What began as a power issue for a handful of U.S. states is rippling into a shock for the world’s oil market.
More than 4 million barrels a day of output — almost 40% of the nation’s crude production — is now offline, according to traders and executives. One of the world’s biggest oil refining centers has seen output drastically cut back. The waterways that help U.S. oil flow to the rest of the world have been disrupted for much of the week.
“The market is underestimating the amount of oil production lost in Texas due to the bad weather,” said Ben Luckock, co-head of oil trading at commodity giant Trafigura Group.
Brent crude briefly surged above $65 a barrel on Thursday, a level not seen since last January. Spreads indicating supply tightness also soared. Ten months ago, the price slumped below $16 because of a demand shock caused by COVID-19.
In the past, the weather-related disruption would largely have been a U.S. issue. Now it’s unmistakably global. Crude markets in Europe are rallying as traders replace lost U.S. exports. OPEC and its allies must decide how much longer they keep millions of barrels of their supply off the market.
Estimates for how long the outages may last have gotten progressively longer in recent days as analysts try to figure out the time span involved in thawing out infrastructure, especially in those areas where freezing weather isn’t the norm.
At first, traders and consultants expected a hit to U.S. production that would last between two and three days. Now it’s looking unlikely that things will start to recover much before the weekend, and a full resumption could take weeks.
That means ever more barrels are being removed from the global market. Citigroup said it expects a production loss of 16 million barrels through early March, but some trader estimates are now almost double that. Vast swaths of production in the Permian — the heartland of U.S. shale output — have been shut in.
The result has been a surge in the value of crude barrels in other parts of the world. North Sea traders have been frantically bidding for the region’s cargoes this week as replacements are sought for U.S. crude exports. As Europe’s supplies have gotten more expensive, Asian buyers have been snapping up Middle Eastern shipments at higher premiums.
And though headline crude futures are at their highest level in over a year, they’re set to rise higher because the loss of refining capacity is equally acute. The country’s largest plant has closed, and at least 3 million barrels a day of processing got taken offline. Traders are rushing to send millions of barrels of diesel across the Atlantic to the U.S., a potential boon for Europe’s downtrodden refining industry.
The result is going to mean a mixed picture for U.S. inventories in the coming weeks. While gasoline production has been hit by the spate of refinery outages, there are also far fewer drivers on the roads than normal. Stockpiles of heating fuels like propane and diesel — for which demand was already soaring before this week’s weather — are set to fall sharply.
All of which leaves Saudi Arabia and its OPEC allies keenly watching the Texas weather forecast.
Jet, the little 5-by-7 weekly magazine, always published a list of the Black entertainers and sports figures who were to be on TV the coming week. In 1963 that was not a long list. That, plus the fact that we always watched CBS anyway because it was Walter Cronkite’s station, is how I found Cicely Tyson starring in the TV drama “East Side/West Side.”
That year, 1963, was pivotal in American history, not least for this 13-year-old Negro girl, that is what we were called then, Negro. Sitting comfortably in my Northwest Washington, D.C., home I watched on TV as police used fire hoses and attack dogs on the Negroes across the South who were peacefully demonstrating for the right to participate fully in the American dream. I watched as the news reports came in of four little girls, my age, being blown to bits by Ku Klux Klan bombs, at church — at church. Medgar Evers, an NAACP organizer in Mississippi, was shot dead in his driveway in front of his wife and children. And then there was going to be the March on Washington.
My father said that Rev. King would be there talking, and it would be a historic day. Me and Tex, my brother, got all dressed up to go. I was in crinoline slips and my favorite navy-blue dress with red and white stripes. I hated that it would get torn up when I started to run. Cause that’s what the Negroes did in the pictures in Jet magazine and on TV. Run.
I was a little scared because there would be dogs, not like Goldie, our Collie, but like Butch, our Aunt Louise’s dog that bit the neighbor cat. Police always seem to have that kind of dog. And I was having to wear my favorite dress. I decided Mommy wanted me to wear that one because it seemed more patriotic. But Tex cheated, he had two Sunday suits, so he put on the old one. It had ankle spanks cause he had grown 3 inches that summer. He said it would be OK to get blood all over that suit.
Anyway, that is how I decided to be a social worker; Cicely Tyson was on TV. She was playing the part of the secretary, not a real social worker like the star, George C. Scott, but she did a lot of social workie stuff.
Cicely Tyson was the first Black woman to have a regularly featured role on a TV series. Not only that, she had nappy hair. It was not called an “Afro” back then, and a lot of people did not like the idea that her hair was not “dyed, fried and laid to the side,” pressed or permed. But I liked it. I liked everything about how she looked and what she did. I liked all the clothes she wore.
I liked it when she explained things to “liberal” white people. In one episode she got to be the teacher for a group of white adults. I liked that. I liked that she stood up to George C. Scott when she disagreed. I wanted to be Cicely Tyson’s character, come to life. So, no matter what was happening I made sure to be seated in front of the TV when that show came on. In the scores of TV and movie roles she played since, she maintained the fortitude and dignity first displayed in “East Side/West Side.” Her portrayal in those roles and in life was as a civil-rights pioneer.
There is no irony in the fact that in the two days before her death Cicely Tyson was giving interviews still exemplifying that resilience.
From 1963 onward she set a standard for me. I did not become a social worker, at least that was never my official job title. I spent my career as a civil-rights compliance officer, a different kind of social worker. Thank you, Ms. Tyson, from just one of your loyal fans.