Sunday, February 28, 2021

Texan Self-Made Energy Alamo



Recently an Ice Age-like storm consumed Texas and pushed its electrical grid to the precipice. If not for the rapid reaction of energy operators to shut down these systems, Texans would have found themselves in a perilous Mad Max landscape.

Despite this near miss, operationally Texas was transformed into a temporary failed state leaving 14 million residents without safe drinking water whose source comes from 1,000 public water systems while millions more had no electricity. Shockingly with a bit of clever editing by even rank video amateurs, one could swear the photos of suffering Texans were citizens in war-torn Syria.

Mother nature took down the grid more effectively than any rogue or state sponsored hacker or terrorist. The destruction to infrastructure far exceeded Hurricane Katrina (2005) and Hurricane Sandy (2012) which were impacted more harshly because they were coastal communities from ocean-borne storms.

For this reason, Texas, as America’s energy mecca, in a present-day world of surfeit oil and natural gas inventories due to a paucity of economic activity, was unable to deliver limited energy within the state itself. It’s analogous to the scene in the iconic movie Chinatown (1974) when the coroner quipped to private investigator Jake Gittes (Jack Nicholson) the irony of the water commissioner drowning during a drought.

The following chart entitled Texas Struggles Amid Crippling Blackouts provided by and presented by Statista, an online statistical firm, is a state-by-state comparative analysis of customers disconnected during the nationwide winter storm.

Self-Made Energy Alamo

Texas’ electricity grid is called the “Texas Interconnection” of which 75% of its electricity is managed by the grid operator Electric Reliability Council of Texas (Ercot). Texas is the only state which does not have inter-state electrical connectivity, a status which Texans decided since the early 20th century. For this reason their grid requires no federal oversight. Furthermore this meant that like the infamous battle at Alamo that began 23 February 1836, the winter storm which ironically began around the same time on 14-15 February 2021, no one could come to their rescue.

Because of deregulation Texas residents receive competitively retail priced electricity, slightly below the national average. However, according to the US Energy Information Agency (EIA) the average Texas resident’s electric bill is higher than the national average because their average monthly consumption is higher than the national average. The average nationwide monthly electric bill is $115.49 versus the average monthly Texan’s bill of $134.07.

For the purposes of understanding the breadth of the crisis the following is a chart entitled How Texas Generates Its Electricity provided by Ercot and presented by Statista.


Texas-Size Psychological Stress | “Houston, We Have a Problem”

Rarely mentioned specific to Texas is the elevated severe psychological stress. Texans are more accustomed to blistering heat waves and the ensuing energy problems rather than severe cold. Extreme weather hot or cold can cause the same energy outages but the former is far better experienced. Finally, far fewer Texans are properly prepared with Arctic conditions to cope with respect to winter clothing, blankets, etc. For example with respect to large urban cities the average winter temperature range in Dallas is between 41-61 degrees Fahrenheit and for Houston it’s between 45-60 degrees Fahrenheit.

“The Limits of Control”

In defense of utilities, even an unlimited budget will always be surpassed by unlimited meteorological power. In a world of stupefying self-entitlement and psychological snowflakes, there’s an utopian illusion that there exists the perfect business model, blessed by government, enabling the community to withstand any force majeure event and cover every contingency while providing uninterrupted level of service at competitive prices.

On a personal level, imagine yourself falling heads over heels over an affordable property located in a well-known historical flood zone. You know the risk and are willing to purchase the property along with more than enough flood insurance. Furthermore you’re also informed that historically there are mild earthquakes that occur once every 50 years so you buy earthquake insurance – at a far cheaper premium because of its low probability of occurrence. Wouldn’t you know it a massive earthquake hits causing damage that exceeds your earthquake insurance.

Well a similar event happened in Texas. Increasingly brutal heat waves are the historical norm however extreme winter storms occur far less often, the last occurring in February 2011 and the one before that in 1989. Can you imagine the press and public outrage over the millions spent on the “winterization” of facilities if there are no winter storms but severe heat waves? It’s akin to purchasing a goose-down coat for that occasional freakish cold snap as a resident of a Caribbean island instead of more SPF protection cotton shirts, pants and hats. Whether governmental, private or personal, it’s budgetary real politik.

Sclerotic Status Quo

How will Ercot and Texas political leadership mitigate present-day, near and far-future infrastructure vulnerabilities?

·         The long-term multi-billion dollar requirement to upgrade and harden an aging infrastructure against particularly against winter storms which occur infrequently will be discussed but never undertaken. Why?

·         A technical bankrupt state and deeply politically divided federal government which nullifies such funding.

·         Accepting “free” federal money, if offered and available, would establish a lethal political precedent with respect to federal government mandates and inevitably open the floodgates to future federally-mandated and controlled projects. In others words a loss of independence and control called state sovereignty.

·         Texas is one of the reddest of red states before it was red. Even if it was blue, Texas is Texas and always will be – independent and answerable to no one. State sovereignty plus.

·         Ercot will craft a brilliant, non-binding plan in their public relations campaign without doing anything operationally substantive, perhaps only changing/modifying crisis management protocols, because of the aforementioned reasons and guaranteed negative return on investment - a corporate pushback.

In other words, nothing will be done even if Texas, or hell, whichever comes first, freezes over. Literally. Going forward for Texas and everywhere else, it’s not a question of solving the problem, rather containing the crisis.

“Brace for Impact” | Economic Vulnerabilities


The implications when the grid and other systems collapse will be catastrophic. The magnitude of the Texas electrical grid failing for an extended time is mind-boggling. Consider the following: 

·      Texas’ gross domestic production (GDP) of $1.887 trillion qualifies as the world’s 9th largest economy behind Italy’s $2 trillion and ahead of Brazil’s $1.8 trillion. Furthermore the 2020 arrival or expansion of operations from Amazon, CBRE, Tesla, HP and Oracle to Texas has considerably increased the size of Texas’ economy. Its collapse will crush the American economy in a myriad of ways along the efficient yet vulnerable supply chains which rely on energy.

·         Texas is America’s energy mecca and energy producing powerhouse that was left temporarily impotent by mother nature. America went from energy self-sufficiency to energy-dependent on imports overnight. An economic contagion would spread almost immediately.

·         These vulnerabilities are not unique to Texas but are now manifesting into economy-killer events that occur in states with essential, country-size powerhouse economies. We are in a cycle of more severe and frequent storms which will adversely impact an aging infrastructure whose series of blackouts, brownouts and other outages are an added burden to America’s economic recovery.

“Brace for Impact” | Crowd Control Chaos

·         According to Ercot executives Texas was minutes away from a total grid collapse which would have resulted in limited or no power for months until replacement parts were installed in a myriad of electrical substations and other facilities. The B-movie “just in time” rescue prevented an inevitable societal collapse. Imagine a population of almost 30 million residents – similar to that of Ukraine - with no power, no electricity, no fuel, useless supply chain for food deliveries – a monumental humanitarian crisis would ensue.

Texan society would revert to a “frontier” survivalist mindset and a violent one at that as citizens would devolve to their primal instincts for survival armed with lots of firepower and the formation of neighborhood militias directed by local warlords. Imagine a Texan version of the original apocalyptic movie Mad Max (1981) that interestingly took place in Australia, a similar geographic landscape.

For this reason a prolonged state of emergency situation could ignite a powderkeg. The link to the following chart entitled Gun Ownership by State (2021) presented by the Pew Research Center provides nationwide gun ownership. Gun ownership from Texas’ population of almost 40 million is 35.7%. This translates to 10.71 million gunowners averaging 18 guns per gun owner. Total registered guns are 588,696, the key word being “registered”.

Probably no one can sum up the dire possibilities of a grid failure anywhere in the US better than the late yet prescient George Carlin’s skit of a world without electricity. Carlin mentions it would take two years for us to return to the Stone Age but the darker truth is that it would take a mere two weeks.

© Copyright 2021 Cerulean Council LLC

The Cerulean Council is a NYC-based think-tank that provides prescient, beyond-the-horizon, contrarian perspectives and risk assessments on geopolitical dynamics and global urban security with counter-intuitive solutions.

Tuesday, February 2, 2021

Exporting American Apple Pie Extremism


Apple Pie Origins

The “Made in America” Weimar Republic-like chaotic violence last spring and summer reached a crescendo of intensity with the dramatic assault and occupation of the US Capitol building in early last month with the temporary “planting” of the Confederate battle flag. Notwithstanding the following week the Inauguration was held, a lawful and peaceful transition but under a police state level of security underscoring the present-day brittleness of American democracy.

Because the impossible has become the plausible, certain present-day governments must be shaking in their boots fearing a surge of social upheaval and threat to their control. If the US, a beacon of political stability and civilized democratic practices, can come to the brink of implosion with the urging of elected political figures at the highest levels, then such an insurrection is not only likely, rather inevitable elsewhere. Think of this situation as the 21st century domino effect with its genesis originating in the US.

France and Germany | Turning Point Elections

The US, a democratic empire with respect to dwarfing every other nation in economic and military might and a longer and deeper running democracy, fissures are appearing in its socio-economic-political model. European democracies such as Germany and France have their respective growing legitimately elected ultra-conservative political parties which are making dramatic gains in government representation and have gained a certain level of respectability with the mainstream.

For ultra-conservative and perhaps radical political elements, America’s beacon of light has a darker and more sinister hue that has tacitly “legitimized” the next level of political aggressiveness because it is either silently supported or not challenged by their well-educated mainstream demographic.

And like their American counterparts who reach back to a delusional revisionist past chanting the mantra, “Make American Great Again”, European homegrown radicals and sympathizers espouse their own version of an undemocratic, ruthless and racist era such as the Third Reich and France’s colonial empire.

The political crossroads for Germany and France are looming on the horizon. Germany has major federal elections this fall. France’s presidential elections are scheduled to take place in May 2022. With the departure of Germany’s Chancellor Angela Merkel, there is no dynamically strong incumbent to serve as an anchor for democratic principles against ultra-conservative parties like the Alternative for Germany.

In France Marine Le Pen’s popularity is surging and according to several highly regard polls, she’s within striking distance of seriously challenging President Macron to whom she lost in a landslide in 2017. Keep in mind that President Macron was an unknown who came from nowhere in forming his own party and within a year of its formation had captured the Elysee.

The ultra-nationalists in both countries are gaining traction because of the pandemic-induced recession and deteriorating economies not to mention draconian lockdowns. Without a strong and noticeable economic recovery in the near future public sentiment will doubt the ability of traditional centrist parties and seek the alternative light, albeit a dark one, in the form of torches.

Russia | Krashing the Kremlin

Although many illiberal democracies and autocratic governments might be reveling in glee over the siege at the US Capitol building that counters the US pro-democracy advocacy, only the most near-sighted of them can’t ignore that those mob scenes may be a preview that could occur among their own citizenry. If such an insurrection could occur in Washington, DC on large scale and come within a whisker of harming high-level government officials, then anything is possible.

In the past weeks protests have swelled across a wide political-socio-economic demographic swath in 100 cities from Moscow to Vladivostok despite brutally cold weather. This has compelled Russian law enforcement to arrest and detain thousands, more than the “usual suspects” including over 80 journalists.

Nonetheless it’s not the thousands unarmed protestors that keeps Putin & Company up at night. Though visually impressive, the number of protestors doesn’t come close to threatening the present-day leadership. Rather Putin fears the erosion of political power in the upcoming legislative elections in September 2021 for the 450 seats in the State Duma of which United Russia the ruling party has 343 seats.

Strangely Putin is manifesting his own Twilight Zone déjà vu demise in the potential disintegration of his personal empire in the same way he witnessed the collapse of the Soviet Union. The sentencing of his political nemesis Alexi Navalry for 2½ years makes it difficult to determine how this will play out with future protests. But like all ultra-nationalists, the tighter the grip, the more brittle the control.

With respect to security, five years ago Putin had Cassandra Complex-like foresight to establish special National Guard as a counter-measure for such contingencies. My article entitled Putin’s SS – The Kremlin’s Bodyguards published 30 December 2016 described the consolidation of several security services to form a 350,000 man force based exclusively in Moscow under his direct command.

Turkey | Overlooked and Under-Appreciated

The country that the mainstream media frequently overlooks with respect to their socio-economic situation is the crushing poverty that the pandemic has caused the general population, pushing many in the middle class into poverty for the first time in generations. This situation is creating and stoking a potential social unrest tinderbox that Erdogan’s government is ill-equipped to resolve economically with some form of relief funds.

According to a 2019 Income and Living Conditions Survey of the Turkish Statistical Institute (TUIK) 17 million Turks live below the poverty line in a population of 81 million. The survey’s definition of “poor” is when incomes are 60% less than the median income. In Turkey that translates to 21.5 million poor families.

The 2020 survey, which would encompass pandemic related issues, won’t be released until this upcoming September. For this reason the present-day economic suffering is anecdotal rather than quantitative. Although Turkey’s presidential and general elections for the 600 member Grand National Assembly aren’t scheduled until 2023, popular discontent is growing rapidly and can boil over well beforehand.

Instability in Turkey is a critical concern for the rest of Europe because Turkey is a buffer between Europe and the anarchistic situation in the Middle East not to mention the hundreds of thousands of refugees.

Copycat Chaos

The burning questions is, “What are we in for?” The clumsy, uncoordinated, haphazard and incompetent efforts by vaccine manufacturers and governments to distribute the vaccine and continued imposition of draconian lockdowns serve as a catalyst for conspiracy theories of a masterplan orchestrated by a shadowy elite. It’s perfect public relations fodder for opposing political groups who realize that they won’t have a better opportunity than now to challenge and replace the present-day governments whether at the ballot box or otherwise.

The depth of the discontentment among a wide & deep swath of the mainstream demographic in many countries is articulated in The Atlantic’s article entitled The Capitol Rioters Aren’t Like Other Extremists, published 2 February 2021. In sum the majority of the protestors are first-time protestors, middle age professionals, with no affiliation with ultra-conservative or radical groups.

Similarly in Russia the demographics of the protestors include many first-time protestors who are middle age across the political spectrum from Stalinists, nationalist and urban professionals, not the stereotypical narrowly defined reckless youth.

Worldwide discontent occurring simultaneously in key countries that will compel these governments to batten down the hatches and focus their efforts domestically making international cooperation more difficult. Finally international cooperation on a myriad of issues will be exacerbated should there be a dramatic change in political parties in the aforementioned countries.


© Copyright 2021 Cerulean Council LLC

The Cerulean Council is a NYC-based think-tank that provides prescient, beyond-the-horizon, contrarian perspectives and risk assessments on geopolitical dynamics and global urban security.