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TRC Seeks Legislative Relief for Producers

TRC Seeks Legislative Relief for Producers

Seeking emergency relief for Texas oil and gas producers suffering from low commodity prices, the three-member Texas Railroad Commission (TRC) last week voted to propose state legislation to suspend severance tax payments when the price for oil and gas drops below $15/barrel of oil or $1.50/Mcf of natural gas as determined by the Comptroller of Public Accounts.

In addition, the Commission voted to suspend for six months all new regulations relating to oil and gas exploration and production to ease the regulatory burden, except when necessary or when regulation may be needed to protect the environment or public safety.

Commissioner Tony Garza said, "this is about survival," and noted that severe losses of revenue, production, oil reserves and jobs are hurting the industry. "Texas oil producers are being devastated by oil prices that are in most cases substantially below the cost of finding and producing crude," he said. "Today, with the price per barrel where it is, there is simply no way the domestic energy industry, in particular the independents in our state, can stay competitive with foreign oil."

Currently, the severance tax on oil is 4.6% of value received at the wellhead, and the severance tax on natural gas is 7.5% of the wellhead value.

In other TRC news, the current Texas legislative session will see another attempt to merge the Texas Public Utility Commission and the Railroad Commission to create a single agency regulating natural gas, electricity, oil production, as well as telecommunications utilities. The same was attempted in the last legislative session. This time around it's Rep. Bill Siebert, R-San Antonio, promoting the idea.

Any move to merge the two agencies would lack the support of Gov. George W. Bush, according to his office. The three TRC commissioners are elected while PUC commissioners are appointed. It is claimed by Siebert and others that elected commissioners are more responsive to their constituencies and a merged agency would be more efficient.

Joe Fisher, Houston

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