How Extreme Cold Turned Into a U.S. Energy Crisis

February 2021 won’t soon be forgotten in energy markets. Over the better part of two weeks, a cold blast across the central U.S. froze natural gas pipelines, sent electricity prices skyrocketing to record levels, caused U.S. oil production to drop by more than 4 million barrels a day and led to power outages at 5 million American homes and businesses, mostly in Texas. There was no shortage of blame to go around.

A polar vortex -- a girdle of winds that keep cold bottled in the Arctic -- buckled and released record-breaking cold across much of the U.S. Gas pipelines seized up, wind turbines froze and frozen water vapor forced the shuttering of oil wells, even as homes and businesses raised demand for heating to record levels. Prices of heating fuels, including oil and natural gas, surged. Demand for propane climbed to a 17-year high. Wholesale electricity prices in Texas skyrocketed to $9,000 a megawatt-hour, the maximum allowed in the market. Natural gas spot prices reached $1,250 per million British thermal units before falling back to $4, in line with prices the prior week.