Texas Railroad Commissioners erred on the side of caution April 21, opting at the moment not to force oil companies to collectively cut 20% of their production but instead take time to consult legal counsel, get unanswered questions answered and meet with other oil-producing states and countries battling today’s oil market crisis.
The decision not to act on the request by Permian Basin pure-plays Pioneer Natural Resources Co. and Parsley Energy Inc. came a day after the market saw WTI futures prices for May delivery sank deep into negative territory before expiring. June futures were down 35% to about $13.34/bbl the next day. It was the latest blow for an industry working to overcome dire market forces dragged by the global coronavirus pandemic that has zapped demand amid an abundance of oil, moving executives to slash spending and jobs.
Though Commissioner Ryan Sitton said he was prepared to vote on the issue given rapidly changing market conditions, legal consequences of acting hastily, not wanting Texas to act alone, get more information on certain issues and exploring all options appeared to the main motivators for Chairman Wayne Christian and Commissioner Christi Craddick holding off on a vote.