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.
In other TRC news, the current Texas legislative session willsee another attempt to merge the Texas Public Utility Commissionand the Railroad Commission to create a single agency regulatingnatural gas, electricity, oil production, as well astelecommunications utilities. The same was attempted in the lastlegislative session. This time around it’s Rep. Bill Siebert, R-SanAntonio, promoting the idea.
Any move to merge the two agencies would lack the support ofGov. George W. Bush, according to his office. The three TRCcommissioners are elected while PUC commissioners are appointed. Itis claimed by Siebert and others that elected commissioners aremore responsive to their constituencies and a merged agency wouldbe more efficient.
Joe Fisher, Houston
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