Commodity Market Indicators of a 2022 Texas Winter Freeze

Winter storm Uri impacted large swaths of the Continental United States, including the State of Texas, over the period Feb. 13 -- Feb. 17, 2021. This research attempts to discern what the natgas and power commodity markets are anticipating for Texas for the First Quarter of 2022. As of this writing, natgas prices for Feb. 2022 are 7.49% (33 cents/MMBtu) higher, and power prices 37.8% ($18.67/MWh) higher, than their respective non-freeze benchmarks. While these numbers appear large, they should be set in perspective: If the spike in prices is as pronounced in duration and intensity as last year, markets are indicating a probability between 1.3% and 2.5% of a Winter 2022 recurrence of the events of Feb. 2021.