The roof may have leaked a little during the last downpour, but that was so long ago I can barely remember. Today is bright, sunny and dry and the last thing I want to think about is contracting for a new roof. On the other hand, the roof is over 30 years old and the leak isn’t going to fix itself. The time to replace or repair it is before the next downpour. But today, I don’t need a new roof. (Actually, I probably do but I’m trying to make a point.) We live in a world full of risks which we tend to ignore until they actually affect us. Californians may be vulnerable to earthquakes, but only 13% buy earthquake insurance.
I once asked my friend and insurance guru if I really needed flood insurance given the unlikelihood of a flood in our area. His answer was a simple question. “But it could happen and are you willing or able to self-insure against a catastrophic loss resulting from a flood?” I also asked him about sinkhole insurance and got the same reply.
Insurance carriers base premiums on risk and the probability of events occurring. Probability and statistics also provide useful tools for decision makers by forcing them to quantify alternative solutions to problems. In trying to decide, for example, whether or not to winterize energy delivery infrastructure in Texas against the effects of a highly-unlikely severe winter storm and cold spell, decision makers undoubtedly weighed the high cost of doing so against the slim odds of such a weather phenomenon occurring in the mostly-temperate Lone Star State.
But such a phenomenon did occur and the frozen pipelines, freezing water and extended blackouts wreaked havoc on power plants, fuel storage facilities and water supplies. The resulting natural gas shortage and increased demand sent energy prices soaring to unforeseen levels as horrified customers discovered when they received their bills. Dozens died from freezing, carbon monoxide poisoning or other causes related to the failure of the state’s gas and power generation infrastructure. How could this happen in a state that is the nation’s energy capitol and leading gas producer?
Winterizing pipelines and other energy delivery infrastructure is expensive and, given the odds against the freakish weather that Texans endured in February, it may have seemed like an unnecessary expense until the unlikely happened and the finger-pointing began. There are, to be sure, many lessons to be learned from this disaster and the subject is complex but perhaps the most important lesson is that when human lives are at stake, decision makers and risk managers need to provide for the worst case scenario and, to put it bluntly, ask “How many lives lost are you willing to accept if it happens?”
We live with risk every day, of course, such as when we fly, board a bus or train, drive a car, cross the street, etc. But we accept such risk as a matter of convenience and because mobility is pretty much essential to normal living. But where human lives are at stake, is it acceptable to risk them just to save money?
There’s another lesson to be gleaned from this disaster. Critics of the movement to ban fracking, cease pipeline construction and leave all fossile fuels in the ground were quick to blame frozen wind turbines for the blackouts and near collapse of the Texas grid, but the principal problems were the natural gas shortages and the subsequent loss of gas-fired power generators. The Biden Administration is opposed to fracking and pipeline construction on federal lands. New York’s Gov. Andrew Cuomo refuses to permit pipeline construction across New York State that could carry natural gas to New York and the New England states where it is needed and where winter storms like Texas experienced in February are normal. Supporters of the Green New deal argue passionately that climate change caused by burning carbon-based fuels is an existential threat to the planet. But meanwhile, disasters like what happened in Texas demonstrate that we are still very reliant on fossile fuels, with which we are, thankfully, well- endowed, to survive.
The near failure of the independent Texas grid reminds us that the national power grid is aging, fragile and extremely vulnerable to foreign and domestic mischief which could result in a disastrous nation-wide blackout without warning. What is being done to harden it against such an event?
Americans should want some answers as a matter of some urgency because such an event could be far more than just an inconvenience.