US Crude Oil Production Cut Discussions Intensify... 'Divided Opinions on Pros and Cons'

Texas Railroad Commission Holds Public Hearing on 14th
Reduction Side: "Necessary to Protect Jobs and Industry"
Opposition Side: "Supply-Demand Imbalance Happens... Should Be Left to the Market"

[Asia Economy Reporter Naju-seok] It is reported that a heated debate took place over the issue of reducing crude oil production in the state of Texas, USA. While some argued that production cuts are necessary to maintain market stabilization and employment conditions, there were also strong counterarguments that artificial production cuts should not be made by abandoning market principles.

On the 14th (local time), the 'Texas Railroad Commission' held a public hearing to discuss the issue of reducing crude oil production in Texas. Due to antitrust laws and other factors, even the U.S. president cannot decide on production cuts, but this commission holds powerful authority to make decisions on production cuts and related matters. The commission can decide on production cuts from the perspective of whether the resource of Texas crude oil is being wasted. Although the commission has not discussed production cuts since the 1970s, it has recently begun discussing the issue for the first time in decades due to demand contraction caused by the novel coronavirus disease (COVID-19).

[Image source=Yonhap News]

Wayne Christian, chairman of the Texas Railroad Commission, began the meeting by saying, "The Railroad Commission can make production cut decisions that even the U.S. president cannot make," and added, "We must feel an extraordinary sense of responsibility." Industry representatives attended the public hearing and expressed both support and opposition.

Shale companies such as Pioneer Natural Resources and Parsley Energy expressed the position that production cuts are necessary. On the other hand, large oil producers like ExxonMobil and Occidental Petroleum opposed the cuts.

At the public hearing, Scon Sheffield, CEO of Pioneer Natural Resources, said, "No one wants to provide funding," explaining, "Because they think we will waste capital and create economic garbage." He added, "If the Railroad Commission does not regulate this issue in the long term, the oil industry, like the coal industry, could disappear."

On the other hand, Lee Tillman of Marathon Oil opposed artificial production cuts. He argued, "Demand-supply imbalances have always existed," and said, "At such times, some companies succeed while others go bankrupt," questioning, "What exactly is the limit where even the principles of market economy must be abandoned?"

It has been confirmed that there are differences of opinion among the members of the Railroad Commission. Commissioner Ryan Sitton previously stated, "If a considerable level of production cuts is made, the meltdown of the oil-related industry can be avoided." In contrast, Chairman Christian expressed a skeptical stance on production cuts. Before the public hearing, he mentioned, "I am skeptical about production cuts, but I will approach the meeting with an open mind."

The Wall Street Journal (WSJ) predicted that no immediate conclusion would be reached that day.

Meanwhile, Oklahoma plans to discuss production cuts on the 11th of next month. On the other hand, North Dakota is reportedly not yet considering production cuts.

This content was produced with the assistance of AI translation services.