Texas rejects statewide oil production cuts

The Railroad Commission of Texas voted 2-1 on Tuesday to reject a proposal that would have enacted statewide oil production cuts but voted unanimously in favor of waiving fees for new crude oil storage projects.

Chairman Wayne Christian and Commissioner Christi Craddick rejected a measure for a hearing on the production cuts, effectively putting an end to the issue. Commissioner Ryan Sitton cast the lone vote to give it more discussion.

With an estimated 71.2 million barrels of crude oil storage left in Texas, the three commissioners voted to waive fees related to various new oil storage projects through the end of the year.

The oil industry is facing an unprecedented crisis as the coronavirus pandemic slashes global demand and a shortlived price war between Saudi Arabia and Russia exacerbated a global supply glut that sent prices of West Texas Intermediate, the U.S. benchmark, to record lows that at one point last month, went below zero.

As prices tumbled, Irving oil company Pioneer Natural Resources and Austin oil company Parsley Energy asked the commission in March to consider ordering statewide production cuts for the first time since the 1970s.

The debate divided the industry, with smaller producers and environmentalists in favor of proration. Larger producers opposed mandatory cuts, saying economic forces would accomplish the same goal.