Low oil prices will crush Texas economy. Here’s what the state must do in response

The Texas oil economy is in freefall, and the state officials with the power to help are sitting on the sidelines.

As if to underscore the sense of desperation, more than 20,000 people have been watching the Texas Railroad Commission’s online hearings into whether it should do its job and enact oil production controls. If they are looking for leadership or answers, they are sorely disappointed.

This is not just about the oil industry. The very future of our state is at stake, and the outcome will have a direct impact on every Texan.

As the world has shut down and we stay home, avoid airplanes and park our cars, oil demand has plummeted. At the same time, Russia and Saudi Arabia have chosen to put a glut of oil on the market. The result is a dramatically oversupplied global market with nowhere to store the excess oil. On Monday, oil futures hit negative $34 per barrel.

Oil companies are dying. Within weeks, hundreds of thousands of jobs will be lost.

When the oil industry loses, Texas loses. The energy industry generates billions of dollars in taxes that fund our schools, roads and much more. The grim outlook will reverberate through every inch of Texas.

As bad as things look, we have options to mitigate this disaster. For more than a century, the Railroad Commission has had the power to stabilize the market and prevent massive busts like the one we’re now in.

Until the 1970s, it used these powers, known as proration or production controls. Even through the early 2000s, it kept running the machinery that safeguards us all.

Then, it shut off the lights and locked the doors on its proration knowledge and expertise. Because it mothballed its regulatory machinery, the current commissioners said they don’t even know how to make it work anymore. This is no way to run a railroad, and it’s certainly no way to run the Railroad Commission.

Texans expect their elected officials to use all the tools available to address the double whammy of a global pandemic and foreign governments’ attacks on our domestic industries. We should rise to the occasion, not shrink from it.

We can’t wait for the Saudis and the Russians to save us, and we can’t count on Washington, either. We Texans drive this train. We don’t sit back, asleep at the wheel, hoping the train drives itself.

As my good friend T. Boone Pickens once noted, the quality of a good leader is the willingness to make decisions. “Don’t fall victim to what I call the ‘ready-aim-aim-aim-aim’ syndrome,” he said. “You must be willing to fire.”

We need leaders who make the bold decisions needed to pull us through tough times. It is possible to regulate without being hostile to industry. I believe in free markets, and so do most Texans. But those who control the global prices don’t, and if we are going to maintain our vital state resources, we need to use our institutional powers to get us out of the ditch.

The Railroad Commission has a legal duty to protect our natural resources and the environment, protect Texas workers and their jobs, and yes, protect the industry from its own worst tendencies. It is time to step up and implement the powers bestowed by the Texas Constitution. It is time to use proration to stop the downward spiral of our economy.

Our future and our livelihoods depend on it.

This story was originally published April 23, 2020 at 7:02 AM.