Jennifer Hiller | Reuters
Texas energy regulators listened as top executives on Tuesday debated whether the state should cut oil output by 1 million barrels per day, but did not indicate how they might vote after more than 10 hours of sometimes dire testimony.
Oil and gas companies are gushing red ink and cutting tens of thousands of workers as oil prices tumble, prompting regulators in the largest U.S. oil-producing state to wade into global oil politics and consider the calls for cuts. U.S. crude oil prices <CLc1> fell during the hearing to under $20 a barrel at one point, a nearly 18-year low.
While the federal government has little power to influence oil production, many state regulators like the Texas Railroad Commission have powers that can include limiting production across the state.
The hearing, based on a request by executives from shale producers Pioneer Natural Resources Co <PXD.N> and Parsley Energy Inc <PE.N>, ignited a debate between those who favor free markets and those who worry that without intervention, small producers could get shut out of oil sales as storage fills next month. Some firms have already started closing wells, several executives said.
The industry is facing a historic economic collapse with $3 per barrel to $10 per barrel oil in coming weeks, Pioneer Chief Executive Scott Sheffield warned commissioners on Tuesday.