The Texas Railroad Commission, the regulatory agency that oversees the oil and gas industries in the Lone Star State, will meet on Tuesday to consider mandating a statewide cut in production for the first time in nearly 50 years.
Demand for oil has plummeted in recent weeks while hundreds of millions of Americans abide by stay-at-home orders amid the ongoing coronavirus pandemic.
Monday was a low point in the history of the oil industry in the United States as a barrel of Texas crude, by at least one major measuring stick, fell to worth less than nothing.
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Oil prices dropped below $0 a barrel for the first time ever on Monday, with May futures of West Texas Intermediate crude, which is the benchmark for crude in the country, sank to minus $37.63 a barrel by the close of the oil market.
"We have seen really, really tough times in the oil business before,” said Texas Senator Kel Seliger, a Republican who represents a large district that includes the oil-rich Permian Basin. “Did anybody think in the farthest reaches of their imagination that it would ever get this low? No."
Even if this supply and demand situation is a relatively short-term problem, the impact on the Texas economy could be long-lasting, according to multiple industry experts.
“With the oversupply of crude oil, and this price dropping, we are going to see massive layoffs, furloughs, and potentially the devastation of the oil and gas industry,” said Ramanan Krishnamoorti, Chief Energy Officer for the University of Houston.
The Texas Railroad Commission has not ordered oil production limits since 1973. The agency met last week to consider the matter, and took more than 10 hours of testimony from nearly 60 “energy executives, analysts and critics,” according to a report in the Texas Tribune, before ultimately deciding to wait to take such an action.