American Consequences writer Andrew Amundson recently sat down with Cactus Schroeder, wildcatter and president of Chisholm Exploration, an oil and gas development and exploration company. Cactus has been drilling oil for more than 35 years.
Right around Valentine’s Day, Texas went dark… Millions of residents suffered without heat, power, and electricity for days on end – a full-on humanitarian crisis amid a pandemic that underscored institutional incompetence and partisan divisiveness writ panoramic.
Or, as wildcatter Cactus Schroeder put it, “I was freezing my ass off.”
Hospitals evacuated patients while people burned their furniture to stay warm, as federal, state, and corporate entities seemingly abandoned most Lone Star State residents. Texas Congressman Ted Cruz jetted off to Cancun. Local mayor Tim Boyd posted his tone-deaf message to Facebook, “It’s not the local government’s responsibility to support you during trying times like this.”
The Right blamed green energy while the Left came after fossil fuels. But beyond the political hackery seeking ideological scapegoats… two core reasons emerged for Texas’ frozen nightmare…
Politically, the too-familiar sound bites poured out from the expected pundits – the Right blamed green energy while the Left came after fossil fuels. But beyond the political hackery seeking ideological scapegoats… two core reasons emerged for Texas’ frozen nightmare.
Anatomy of a Tragedy
Texas is not part of the national power grid, in the most Texas move imaginable – a bit of energy secession to avoid federal regulation. But this electric independence means that it can’t import energy from neighboring states like Oklahoma. This assistance would have been convenient for a once-in-a-decade winter storm thrashing through Dallas and Houston, claiming the lives of more than 30 residents.
The other fundamental issue is that none of these power plants, green or thermal, were winterized. For decades, the powers-at-be balked at these upgraded measures as too costly and irrelevant. I mean, when does it ever snow in Texas, right?
As usual, the short-term profit margin took precedence over the long-term welfare of the people. And as Texas scrambled to meet surging demands, the state was mere seconds away from catastrophic months-long blackouts.
This storm may seem like an anomaly, but there was a comparable winter blast that hit Texas almost 10 years to the day – and in all that time, no one acted on winterization efforts.
In the wake of this calamity, there’s plenty of frostbitten fingers to point at: the state’s power companies, the Electric Reliability Council of Texas which manages the grid, the Public Utility Commission, and finally, the “leadership” from the governor’s office.
In the wake of this calamity, there’s plenty of frostbitten fingers to point at: the state’s power companies, the Electric Reliability Council of Texas (“ERCOT”) which manages the grid (they should rethink that ‘R’), the Public Utility Commission (“PUC”), and finally, the “leadership” from the governor’s office.
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An American Affliction
Another wrinkle in this narrative is that America touted Texas as a sort of COVID utopia before the blackouts. Droves of self-exiled Californians pushed eastward to the Great 28th, like a pandemic-induced, 21st-century reverse Grapes of Wrath.
But if there’s one universality for the American condition, it’s that we never seem to think the worst will happen. Whether it’s a wild, wintry storm, a stock market crash, or a novel coronavirus, our collective memories are shorter than a tweet, and our attention spans are negligible.
But as Texas thaws out, let’s try not to forget… its residents are still recovering, and some are now getting hit with electricity bills of more than $10,000. We’ll take a closer post-mortem look at what transpired, who’s to blame, and how we can prevent the next inevitable crisis in the energy sector.
And who better to dig at the truth of the matter than Texas’ sacred son, Cactus Schroeder: Wildcatter. Investor. Oilman.
A Cactus Grows in Abilene
I can fathom few names more Texan than Cactus. (Sarsaparilla, perhaps.) And just like his namesake, Cactus is a no-fuss, resilient force of nature that’s most likely unkillable. He’ll still be here when the bomb drops and the dust settles – some sepia-hued, hazy, dime-store fever dream of the West, except he’s real.
He sounds just like you’d think, with a dripping twang that invites you in to kick off your boots and stay awhile. When I ask him if it’s fair to call him an oilman, Cactus tells me that’s what he’s claimed his whole life – and that it’s been quite a ride. He’s been in the oil game for longer than I’ve been alive, getting in during the boom of the early 1980s.
And if there isn’t oil coursing through his veins, it’s still somewhere in his DNA. Cactus’ father was in the Air Force for 10 years, but when the last base shut down in Abilene, he got into the oil-service industry. When he was younger, his dad told him, “You can do anything you want, but you’re not getting into oil.”
So Cactus took him at his word, initially.
He kicked off college with an accounting major, but if you speak to Cactus for only a second, there’s one thing you’ll know in your bones: he’s no accountant. So he pivoted to education with a concentration in earth science – he had a knack for it. And in 1981, he got his second degree in geology. But his academic pedigree only surface-scratched his potential, whetting his professional appetite for what lay beneath his feet.
And at that time, the oil business boomed.
Oil had shot from around $2 a barrel in 1972 to nearly $30 a barrel in 1979, spurred on by OPEC and the Arab-Israeli war. And Texas was an epicenter for the industry. So young Cactus, armed with hard-earned knowledge, denying his father’s word but embracing his old man’s history, seized the petroleum opportunity by its slippery horns.
The Texan Tapestry
You don’t mess with Texas. But how many Texases are there? Austin differs wildly from Abilene, and there’s some talk of Texas going Blue in the coming years. So Cactus broke down how he thinks of his home state, claiming a unifier would be its thriving industries – lumber in East Texas, oil in West and South Texas. And he mentions the industriousness of the Hispanics along the border, in San Antonio and El Paso.
In the last six months, three global corporations moved out of California and now call Texas home: Hewlett Packard, Oracle, and Tesla. And there’s no telling how many auxiliary companies will swoop in next, with most settling into Austin.
Cactus tells me, “You can’t keep paying taxes like that and try to keep your business with its head above water. Maybe Silicon Valley can but, hell, even HP is saying goodbye to California.”
Texas is the second-largest state in the union, and Cactus is proud of its diversity from one end to the other. Though he still insists that if you look at it as a whole, it leans conservatively on the political spectrum (even though it has a history of Blue Dog Democrats).
But Cactus could see that changing. There are four million more people in Texas now versus 10 years ago – a lot from California and from over the border. And it’s not just Californians coming to Texas. The aforementioned tech companies have left the Golden State to set up shop in Austin. And they won’t be the last.
Cactus said just in the last six months, residential real estate has tripled. And another pitch: in Texas, your kids can actually go to in-person school. But he doesn’t think the population influx is solely COVID-driven. There are other economic incentives, e.g., there’s no income tax in Texas.
Unreliable Power Sources
When I asked Cactus who bears the bulk of the blame after this frosted calamity, he laid out the broken pieces for me…
“Well, here’s the power structure. You have the governor on top. And he appoints three of the chairpersons on the PUC. The head PUC chairwoman – DeAnn Walker – already resigned. I’m relatively sure that the other chair will follow suit. And those three people on the PUC were making over $200,000 a year. Gov. Abbott makes $153,000 a year. It seems like there’s a little problem there.
“The PUC is over ERCOT. And ERCOT, at that time, had 15 board members – with five of those board members from out of state. Now, how the hell do you get an appointment for five out-of-state board members for the Texas ERCOT?”
Something’s rotten in Austin… Cactus tells me these five ERCOT members are already gone and balks at the salary of ERCOT’s CEO, Bill Magnus, who makes nearly a million dollars a year.
“When the ERCOT CEO is getting paid $876,000, then you better be informed.
“And not only that. Twenty of the other executives or board members were paid between $200,000 and $548,000 a year. Once again, Abbott makes less money than most of them, but it’s still going to fall on him. So this whole thing is going to be redone. That deck is going to be reshuffled.”
It became clear Cactus not only has a nose for oil… He also senses bullshit.
“And the other thing – I started looking at the resumés of all these people. Out of the three at PUC and 15 on ERCOT’s board, how many electrical engineers do you think they had?”
I guessed zero. The correct answer? Two.
“Now, the next most critical background would be petroleum engineering and petroleum geologist — zero of those. Out of all those members, only two had technical knowledge.”
This lack of relevant expertise at ERCOT agitates Cactus’ sensibilities. He purports that if you fill a science-driven board with attorneys, accountants, and PR comms, then inevitably, it’s going to court disaster. And he ultimately frames the failures from on high, not as some sexy Chinatown corruption or Watergate-esque scandal, but as a mess of grossly overpaid, incompetent bureaucrats who never thought this would happen.
Evergreen?
When it comes to fossil fuel versus renewable energy vis-à-vis this crisis, you’d expect a grizzled Texas oilman to scoff at the latter – to chew up AOC’s proposed Green New Deal and spit it out. But he’s more amenable than that.
“You know, when the storm hit, wind went from supplying 42% of the electricity to less than 8%. Solar went from 4% to nothing. Suddenly, gas and coal and nuclear had to put everything on its shoulders and get after it. Gas had a little bit of a problem because its plants shut down. But coal and nuclear, they cut through like jam. They never shut anything down.”
Cactus doesn’t seem to be anti-green energy, but rather more of the mind that the tech just isn’t ready.
“I don’t know what it’s going to be going forward, but we found that we cannot depend solely on green energy. With Biden in as president, they’re going to push a lot of wind and solar. We have to ensure that the gas, coal, and nuclear can produce electricity to the entire state if and when solar gets shut down.
“It’s just a harsh reality that if the wind doesn’t blow, the wind turbine blades don’t turn. And if the sun is down or behind clouds, then solar’s not going to work. I think it would be great if they find ways of storing it – if they have a breakthrough with a battery that can store and supply lots of electrical energy. I’m having a tough time seeing it in my lifetime – maybe my kids will see it.”
And then, the signature Cactus self-effacement…
“But, you know, I’m also old-school. So I may sound like an old, decrepit idiot. That’s just the way I see it.”
Next, he mentions something positively new-school.
“So I always thought that those natural gases we had… people would convert their vehicles into running on that. Buenos Aires and Argentina, every taxi runs on natural gas. Even here in Texas, we had a Democratic governor – Ann Richards back in the early ‘90s – she converted all of the buses in Austin to run on natural gas. She saved them a fortune. And I always thought that that would catch on… “
Cactus likes to say he’s a “results guy.” But he’s also the kind of guy that wants the most sensible thing. Green energy doesn’t hack it yet for him – but he’s still a man who waxes admirably about Argentinian taxis running on natural gas. Imagine.
Cactus likes to say he’s a “results guy.” But he’s also the kind of guy that wants the most sensible thing. Green energy doesn’t hack it yet for him – but he’s still a man who waxes admirably about Argentinian taxis running on natural gas. Imagine.
When the Mercury Breaks
When asked about the need to winterize Texas’ power plants, Cactus agrees it’s urgent, but he’s unsure how many plants will need winterization efforts. If this process commences, he’s confident they’ll start with those closest to metropolitan areas: Houston, Dallas, San Antonio, and El Paso.
Regarding the timeline for winterizing Texas’ plants, Cactus doubts they’ll finish by next year. But he acknowledges the need and sees where his home state failed – at least four million people’s homes went dark, about 15% of all Texans. But when it comes to paying for winterization, he immediately has an answer: Texas’ “rainy-day fund.”
Or in this case, a snowy day.
He’s referring to his state’s Economic Stabilization Fund (“ESF”), and Texas has the nation’s largest ESF at $10 billion (indeed, everything is bigger there). Cactus details that a boom oil year means more capital funneled into the ESF and that the state government could dip into those funds to prep power plants for the next winter.
When I asked him about Texas ever joining the national power grid, I already knew his answer.
“We are very proud of that, we’re very used to it, and we’ve got an ego. We want to keep our power, our grid. We screwed up this time. I don’t think we’ll screw up again. Things will change.”
When I inquire about Cruz’s disappearing act, he just quips, “I would never take my kids to no Mexico.”
Taken in full, he finds less fault in Texas’ energy infrastructure and more in the human element of those behind the curtain politically. Egregious mistakes made and dozens of lives lost.
“Abbott and PUC should’ve been right on top of this as well as ERCOT. And they did a terrible job. And I think Abbott put it in what he thought were capable hands, and they weren’t. I think somebody like Abbott who steps up there and says, ‘Hey. You know, I’m at the top. This is my fault. The buck stops here.’ That would work. But when you start trying to duck and dodge like Cuomo, it makes it worse.”
And he’s right, on two counts. No one wants to be Governor Cuomo right now, and America will generally forgive politicians or corporate entities if they own up to their disastrous mishandlings.
Petrol Past and a Hazy Future
What will Texas look like in 2050? How many winter storms will pulverize the expansive plains from the Panhandle to Brownsville? Will the PUC and ERCOT even exist then? How much will green energy fuel the state that could easily be Red, Blue, or Purple in coming decades? What happens when there are just a few drops of oil left?
But when it comes to his industry or state’s future, Cactus isn’t worried (at all).
“Oil will be here for the next couple of generations. I mean, you’re not just talking about transportation. There are so many things oil makes other than fuel. Paint, chemicals, medicine, plastics, fertilizer – I mean, you go down the list – dozens of products people use every day. So fuel usage, will it go down? Yes. But not drastically.
“Houston is still the oil capital of the world. When people come in from the North Sea, the Middle East, or Jakarta – they get into Houston. They go into the city that has the whole package and learn an awful lot. And I think the Saudis indirectly own some of Texas’ refineries.”
I asked him to pitch me Texas. He laughs, asking if I want him to brag.
“It just has such a diverse feel, no matter what kind of industry. MD Anderson is one of the top hospitals globally in cancer and treatment research – we’ve got some of the best military bases here in Texas. And now, next to California, we have the most vineyards of any other state.”
Just what Gavin Newsom wants to hear.
He mentions the much-bandied minimum wage issue and how many Texan laborers are already making $20 to $35 an hour. Cactus sees Texas just like an immigrant would – wide-eyed and filled with possibilities. For in a country that nearly imploded this past year, buckling under political divisiveness, economic uncertainty, and pandemic fatigue, Texas is still a land of opportunity, a 2021 Ellis Island of sorts, with huddled masses hoping for something better across the border.
Yes, Texas’ reputation just took some double buckshot of rock salt to the face with this latest crisis. But a Blackout Texas is still more appealing than some parts of the country right now – a year into COVID, and there’s this irrepressible urge for Americans to find somewhere, anywhere that smacks of freedom. Oil won’t last forever, but Texas (or the idea of it) just might.
The full extent of ERCOT’s and the PUC’s fumbling will reveal themselves in the coming months. Governor Abbott should publicly take responsibility. Texas power plants need winterization, and there’s a $10 billion piggy bank to help actualize that initiative.
The next winter storm, just like the next stock market crash, is inevitable.
As for Texas having its separate power grid, Cactus and I will have to disagree. But hell, that’s Texas for you.
Cactus shared a final thought about the Big Freeze that I hadn’t considered – nor had I read anything about, either.
“We used to have some of the best speckled trout and red fishing in the bays along the Texas Coast. And I understand with the storm that there was a massive fish kill. And so, it’s going to be fascinating to see how the wildlife got affected. Just around Abilene, I’ve seen a lot of birds that froze to death. I think the deer population has done OK with it. They were able to find food and to keep from freezing to death. But there still has to be a lot of looking-into the wildlife situation – to see how much it was damaged.”
There’s something almost poetic about the great Texan wildcatter Cactus Schroeder, wistfully wondering about all those dead, frozen birds scattered among his home soil.
