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

In addition, the Commission voted to suspend for six months allnew regulations relating to oil and gas exploration and productionto ease the regulatory burden, except when necessary or whenregulation may be needed to protect the environment or publicsafety

Commissioner Tony Garza said, “this is about survival,” andnoted that severe losses of revenue, production, oil reserves andjobs are hurting the industry. Texas oil producers are beingdevastated by oil prices that are in most cases substantially belowthe cost of finding and producing crude,” he said. “Today, with theprice per barrel where it is, there is simply no way the domesticenergy industry, in particular the independents in our state, canstay competitive with foreign oil.

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

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