While Hurricane Isaac is hitting the Gulf Coast, the U.S. energy sector is also coping with the impact of its worst drought in decades, according to the Energy Information Administration (EIA).
Drastically-reduced rainfall and temperatures approaching triple digits for much of the country have affected ethanol production, hydroelectric generation, coal barge traffic on the Mississippi River and cooling water supplies for thermal power plants.
EIA said Aug. 28 on its website that the nation is facing its worst drought in decades as measured by the U.S. National Oceanic and Atmospheric Administration (NOAA).
The U.S. Drought Monitor, a joint publication of NOAA and the Department of Agriculture, is currently reporting that large areas of the Midwest and Great Plains regions are experiencing significant drought conditions. NOAA’s Climate Prediction Center (CPC) is predicting that drought conditions could linger mostly unchanged through November.
“Droughts have relatively well-understood impacts on food crops and markets. But droughts can also affect energy markets,” EIA said. Drought impacts on the energy sector have an impact on everything from transportation fuel to power plants, EIA said.
On the transport side, a significant amount of corn production is used for ethanol, which makes up about 10% of the motor gasoline pool by volume and provides 6%–7% of the gasoline’s energy content.
Electric power generation is, of course, very water intensive, EIA notes.
“Droughts can also create reliability concerns for electric power plants,” EIA said. “Increased temperatures drive demand for electricity to cool homes and businesses, but lower water levels can affect the operation of many thermoelectric power plants.”
One of Dominion’s (NYSE: D) Millstone nuclear units in Connecticut recently spent about two weeks offline because of high water temperatures in the Long island Sound.
As for barge transport of fuels like coal and petroleum, the U.S. Army Corps of Engineers has reported groundings of traffic along the Mississippi River due to low water depths. NOAA has stated that portions of the Mississippi River south of Memphis are below the 1988 low-water level, EIA said.