The Polar Vortex and The Indiana Energy Situation
As we tread through this week of warnings and winter weather advisories we learn how many individuals and organizations were greatly influenced by this powerful storm. Indiana was no exception to the dangerously low temperatures and heavy snowfall which led to Governor Pence declaring a state of emergency in over 29 counties. The icy conditions also resulted in the Indiana Department of Transportation to shutdown two major highways, I-80/94 and I-65, which are main thoroughfares for traveling citizens but also for transporting industrial products. This arctic blast has impacted a number of manufacturing sectors in Indiana and some consumers are without a doubt feeling the effects of this polar vortex.
There are number of industries that will actually benefit from the events of this past week. Automotive repair companies and manufacturers of automotive parts will see increased business. Winter apparel suppliers will also gain sales during these times of extremely low temperatures and it is reported that natural gas prices have increased due to increased demand. Approximately 52 percent homes in the United States rely on natural gas and in Indiana natural gas is the second most consumed energy resource next to coal. Nearly two-thirds of Indiana households utilize natural gas for heating. Many states responded to the increase need of heating sources by declaring exemptions and waivers for truckers to travel further distances to acquire propane, diesel and heating oils. Although the prices for natural gas have surged it is estimated by the Energy Information Association that usage will decrease by 2.2% per day resulting in lower prices.
The low temperatures in the Midwest has also affected a number of refineries resulting in frozen pipes and insufficient air pressure. Several refineries in the Midwest reported issues as temperatures dropped below -20°F and although many problems can be only temporary the effects can quickly influence retail gasoline prices. Refineries in Indiana are known for successful inland crude oil refining throughout the year and these major refineries are designed to continuously operate even in extremely cold conditions. Thankfully these refineries have held up to their design standards and hopefully these facilities make it through this cold snap with no issues.
On the subject of energy, Indiana’s Governor and Indiana Office of Energy Development recently announced they are formulating a new energy plan which is designed to not only keep overall energy prices low by utilizing all of types of energy resources in Indiana but also to improve marketing capabilities of newer energy technologies. The current energy plan, the Homegrown Energy Plan, heavily relies on coal as a source of electricity. The current plan has actually increased the price of energy for industrial customers since 2006. Before the Homegrown Energy Plan Indiana was the fifth lowest paying state for electricity but due to the effects of this plan Indiana is now the 27th lowest. In the new plan manufacturing companies will have the option to buy electricity from out-of-state utility companies.