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After Weeks Of Deliberation, The Texas Railroad Commission Refuses To Mandate Oil Production Cuts

By Mitch Borden

After deliberating for weeks, the Texas Railroad Commission rejected a proposal to cut oil production by 20% in a meeting on Tuesday.

The state’s oil and gas regulator went back and forth last month as oil prices fell into negative territory and the coronavirus pandemic continued to slow the economy.

As demand for oil bottomed out over the last two months, oil producers scrambled to figure out how to save the struggling industry. At the request of Parsley Energy and Pioneer Resources, the Texas Railroad Commission (RRC) considered capping the amount of oil produced in Texas — something they hadn't done since the early 1970s.

Wayne Christian, the chairman of the RRC, said after speaking with leaders in other oil-producing areas, he doesn’t believe cutting oil production by roughly a million barrels of oil a day would benefit anyone.

“By allowing the free market to work producers can determine themselves what level of production is economical.”

The proposal to mandate cuts was divisive. Many oil companies and industry trade groups came out against it, while some companies adamantly supported it. In an op-ed for the Houston Chronicle, Christian outlined the reasons he doesn't believe the commission should control the flow of oil in the Lone Star state.

In a 2 to 1 vote, the commission dismissed the proposal to limit production. Ryan Sitton, the only commissioner open to limiting production said he wished the commission’s decision had been more analytical. 

Sitton believes when the world's economy stabilizes the demand for oil will still be much lower than before the coronavirus pandemic began. He expects the losses from this reduction will be focused in the United States.

Sitton went on to explain that rejecting this proposal is a lost opportunity for the commissioners to examine wasteful excess production in Texas oil fields.

On his website, he wrote "I am not disappointed that we did not prorate.  I am disappointed that we didn’t do our job."

Mitch Borden is Permian Basin Reporter & Producer at Marfa Public Radio.