Apr 30, 2020 - Energy & Environment

Texas to weigh forcing oil producers to cut production next week

Animated gif of an oil barrel disappearing under a cowboy hat
Illustration: Sarah Grillo/Axios

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

Go deeper