Apr 30, 2020 - Energy & Environment
Texas to weigh forcing oil producers to cut production next week
Texas energy regulators will decide on Tuesday whether to mandate oil production cuts in the state.
Why it matters: Demand for oil has crashed as the pandemic-hit world locks down. That dynamic is already forcing some U.S. producers to cut back. The Texas measure, if passed, would force any stragglers to do likewise.
By the numbers: Texas is the largest oil-producing state in the U.S. It pumps out 5.3 million barrels of oil per day.
- The proposal calls for a 20% cut, or about 1 million fewer barrels. Companies that produce fewer than 1,000 barrels per day would be exempt.
Where it stands: Two of three Texas Railroad Commission members need to vote in favor of the rule for it to pass.
- The commissioner who proposed the measure will vote for it. Another, who prefers a free-market approach and says the proposal wouldn't make a dent in global oil supply anyway, will vote against it.
- The third commissioner hasn't weighed in but has raised legal questions about the measure.
- Big oil companies mostly hate the proposal. Independent players like Pioneer Natural Resources have called on the state to curb production.
Go deeper: Coronavirus drives crude oil owners to hunt around for alternative storage