Editorials

Oil and gas regulators worry about money

THE EDITORIAL BOARD

FILE -- In this Sept. 30, 2015, file photo, oil pumps work in the desert oil fields of Sakhir, Bahrain. Global oil supply growth is plunging as drillers slash capital expenditures severely, Europe's energy policy group said Monday, Feb. 22, 2016, which could eventually result in an energy shock.
FILE -- In this Sept. 30, 2015, file photo, oil pumps work in the desert oil fields of Sakhir, Bahrain. Global oil supply growth is plunging as drillers slash capital expenditures severely, Europe's energy policy group said Monday, Feb. 22, 2016, which could eventually result in an energy shock. AP

The three members of the Railroad Commission, all statewide elected officials, told a meeting of the House Energy Resources Committee on Monday they’re afraid they’ll run out of money.

Not today or tomorrow, but at some point if fortunes in Texas oil and gas fields don’t turn around soon — or unless they can get the Legislature to provide more funding.

Disclaimer: The Railroad Commission has nothing to do with railroads.

It’s the state regulator over oil and gas exploration and production, intrastate pipeline safety, natural gas utilities, surface mining and alternative fuels safety.

The biggest part of its spending is on the oil and gas industry.

Proposals to change the name to the Texas Energy Resources Commission, a simple step toward transparency, have failed in the past three legislative sessions.

It’s also important that the commission is largely self-funding.

Its $87 million annual budget draws only a little over $11 million from the state’s General Fund, while almost $67 million comes from permits and other fees paid by the regulated industries.

The rest comes from federal funds and other minor receipts.

Finally, if any state agency should be fully able to pay its own way, this is it. Yet despite several recommendations over the years, that goal has not yet been reached.

“I am deeply concerned current price and activity levels in the energy industry could hurt the long-term sustainability of the Commission under our current funding structure,” said Commission Chairman David Porter. “We must have a serious conversation with the Legislature about how the Railroad Commission is going to be funded moving forward if we’re going to continue to have the financial resources we need to do our job here in Texas and not let the federal government take over by default.”

That last part about a federal takeover was standard Texas Republican fear mongering.

The real point is that commission revenue is robust when oil and gas fields are active and significantly less so when they are not.

With energy prices down, fields are not so active.

Yet commission expenses continue — things like plugging abandoned wells, for example.

There’s no reason to doubt that the financial crunch is real. Maybe the Legislature will need to provide more funding until good times roll around again in the oil patch.

But long term, the commission must raise more money from the industries it regulates.

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