WACO, Texas (KWTX) - The most recent Perryman Economic Forecast for the US and Texas calls for continued recovery from the COVID-19 pandemic and a return to growth through 2025.
According to Dr. M. Ray Perryman, President and CEO of The Perryman Group, “While we are still dealing with the COVID-19 pandemic and timing remains uncertain, there is a plausible path forward with ongoing vaccination programs and better therapeutics.
“We aren’t out of the woods yet, but over the next few years we should see major improvement.”
But what, then, went wrong with the Texas power grid during the recent extreme weather event?
“Everything - but it’s complicated,” Perryman said.
The U.S., Texas, and Waco economies are on track to regain economic ground lost during the pandemic and see growth during the next five years.
“There are always things that can shake up the economy as we saw last year, but on balance, I think we’ll see notable economic growth,” Perryman said.
The Texas economy is expected to expand at a faster pace than the national rate.
“The COVID-19 pandemic did not spare Texas,” Perryman said.
“The state’s largest export industry, oil and gas, was hit particularly hard as demand dropped in 2020, but has begun to recover.
“Many other industries are expanding, with manufacturing, technology, and services businesses leading the way.”
An estimated 1.6 million net new jobs are projected for the Texas economy by 2025, representing a 2.39% annual rate of growth over the period.
For the Waco area, The Perryman Group projects that about 14,553 jobs will be added by 2025, representing an annual rate of growth over the 2020-25 period of 2.22%.
One key issue is that Texas homes, buildings, and power infrastructures are geared toward dealing with the issue that we most often face - heat!
Whether for an individual homeowner or a society, the decision regarding how much to spend on protecting from cold involves an assessment of the costs, benefits, and likelihood of extreme weather.
As the recent historic freeze blanketed Texas, about 40% of generation capacity went offline as demand surged, Perryman pointed out.
“Wind turbines froze and stopped working. Natural gas-fired generation initially increased, as did coal, but weather ultimately caused issues with these facilities as well,” Perryman said.
Gas wells and pipelines were affected, and generators, which often purchase gas through “interruptible” contracts, were competing for supply with the natural gas directly used to warm about 35-percent of Texas homes, Perryman’s study revealed.
“Given the vast resources in the state, a natural gas shortage is particularly difficult to stomach,” he said.
“Moreover, turbines, conventional power plants, gas wells, and pipelines routinely function under frigid conditions elsewhere, but winterization practices in Texas were clearly insufficient.”
Another issue is that much of Texas is an “island” when it comes to its power grid, not connected to other parts of the country.
The Electric Reliability Council of Texas is tasked with ensuring peak demand can be met, yet the grid was apparently just minutes away from catastrophic failure.
The state certainly has the energy resources to meet its needs many times over but choosing to go it alone brings a responsibility to set up and assure a secure power system.
Texas’ relatively more competitive power market has fostered lower prices than would otherwise have been in place and more choices for Texas consumers.
“We have studied this issue several times,” Perryman said, “however, the recent problems have clearly illustrated some shortcomings with the structure that must be addressed.
When the historic freeze led to an all-time peak winter power demand, the grid was not up to the task, and millions of Texans suffered.
“Pointing fingers isn’t helpful, but better oversight and thoughtful tweaks to the current market platform can help to prevent another cataclysmic failure.”
Copyright 2021 KWTX. All rights reserved.
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Central Texas economist forecasts continued recovery and growth - KWTX
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