Texas Suppresses Out-of-State Gas Sales Amid Shortages

Texas is restricting the flow of natural gas across state borders in an extraordinary move that some are calling a violation of the trade clause in the United States Constitution.

Texas Governor Greg Abbott told a news conference on Wednesday that he was banning the gas from leaving the state until February 21 to ensure that power generators in the state had sufficient supplies. But a copy of Abbott’s order seen by Bloomberg showed that he is demanding that Texas gas be offered for sale in the state before it is shipped elsewhere.

According to the so-called Constitution’s trade clause, state governments are prohibited from interfering in interstate commerce. Abbott said that a disaster declaration he issued on February 12 gave him the freedom to impose such restrictions.

Abbott said he was forced to act while millions of Texans remain without power for the third day amid cold temperatures, without a clear timetable for restoring service. Harris County, which covers Houston, said blackouts in the nation’s third largest county could last for another two days.

“I declare that all natural gas purchased will be made available for sale for local power generation opportunities before leaving the state of Texas, effective until February 21, 2021,” Abbott said in a letter to the Texas Railroad Commission, the main regulator of state energy. “I ask that you immediately take all reasonable and necessary measures to ensure that this mandate is fulfilled.

‘Maximum Withdrawal’

Abbott’s announcement surprised some gas traders and spread confusion in a market that was already experiencing major upheaval. A West Coast trader said he lost $ 1 million in minutes. Unable to read the request, others hastily sought answers: Can the gas still be exported to Mexico? Is LNG affected?

“This is an abuse of the Texas Disaster Act,” said Jared Woodfill, a prominent Republican lawyer who repeatedly challenged Abbott about restrictions on coronavirus in 2020. “It’s amazing that there are no limits on Abbott’s mind for what his authority under the Disaster is. Texas Act. He will have as much power as the courts and the legislature will allow. “

Abbott’s office did not respond to a request for comment. The railway commission team is reviewing the governor’s order, said President Christi Craddick during an emergency three-person panel meeting on Wednesday night. The committee agreed on a 3-0 vote to extend its own February 12 emergency order to save fuel in four days until 23 February.

The collapse of the state’s gas supplies when Arctic temperatures rose earlier in the week was one of the factors driving the cascade of disruptions. Abbott said 19,800 megawatts of gas generation remained offline in Texas late Wednesday afternoon.

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