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.