Everyone in Texas is being confronted with the reality of high and escalating energy bills (gas and electricity). Many commercial and residential customers are paying at least 50% more than they did for electric bills at this time last year.
Meanwhile, the state is exporting more natural gas than it has ever before. And since the cost of electricity in Texas is tightly tied directly to the price of natural gas, many business owner’s electricity bills are through the roof with no end to the escalation in site. The concern is that many people are going to be shocked when their bills start coming in 30-60 days from now.
So what is spushing gas and electric bills up so high? Texas power plants run on natural gas.
It’s mainly the price of natural gas… it has rocketed up more than 200% since late February when Russia, a top gas-producing country, invaded Ukraine and upended the world’s energy market. Since then, Texas, the leading natural gas-producing state in the U.S., has not been able to ramp up production enough to keep offering residents cheap electricity.
Since the war in Ukraine began, Texas has been sending most of the natural gas or LNG (liquified natural gas) to Europe as many countries boycott Russian gas, oil, and energy. Europe is fortunate that the U.S. Congress lifted the ban on oil and gas exports back in 2015. Now countries are qeueing up purchase Texas’ gas. At the same time, demand for natural gas has also been growing within the state because
business in Texas hsa been booming attracting more residents. Furthermore, a super-hot spring and early summer also have driven power-usage to record-high levels.
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How long will Texans see higher utility bills?
With the war in Ukraine dragging on and upending the world energy market, Texas electricity providers are cautioning customers that the high rates will likely linger for months. Like the rest of the country, the hike in utility bills comes during difficult financial times for people facing high prices at grocery stores and the fuel pump due to inflation.
On the other side of the coin, the high prices will benefit Texas’ gas producer, and the state benefits from high oil and gas prices in the form of jobs and state taxes on oil and gas production. Cities located in the state’s oil fields usually benefit even more.
No Growth in Energy Production
Even though demand is going up, the oil and gas industry isn’t seeing major production growth because of a backlog of equipment needed. That supply chain issue stems from the pandemic. Though companies are trying to hire, there’s also a shortage of labor across most of the oilfield services. It has been a struggle to get qualified people into the positions that big oil and gas need right now.
Is the price of natural gas the only cause of high electricity prices?
The state’s main power grid operator, the Electric Reliability Council of Texas, has been managing the grid more cautiously and is no longer prioritizing providing Texans cheap power. ERCOT’s prmary focus these days is the grid’s reliability, especially during extreme weather. That means power plants that produce electcity are being asked to stay online and available just in case. Consequently, the state is paying generators a pre-set price to operate no matter what happens. This is quite wasteful… the need for “security” or continuity of power is driving up electricity rates. Before the power grid calamity in 2021, electrciity producers ramped up or went offline based on market demand.
Due to poor administration, Texans are paying for last year’s grid disaster… and will for years.
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