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API Urges Texas Railroad Commission Not to Intervene in Oil Markets

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WASHINGTON, April 14, 2020 — The American Petroleum Institute urged the Texas Railroad Commission to avoid intervening in oil markets ahead of a hearing today to consider production quotas requiring the state’s oil producers to reduce output by 20 percent beginning in May.

"U.S. producers in Texas and across the country have already reduced production to align with market conditions and a historic drop in demand without a government mandate,” API President and CEO Mike Sommers said. “A Texas quota system imitating OPEC is not the answer to the challenges facing the industry and would only penalize the most efficient producers and create long-term negative consequences for American energy leadership. The natural gas and oil industry in Texas will be critical to the nation’s economic recovery, and allowing market forces to work will ensure producers in the state can provide the energy Americans needs once the coronavirus is behind us."

Sommers also discussed the state of the oil markets during a CNBC interview on Monday.

API Chief Economist Dean Foreman emphasized the shortcomings of the proration proposal in written testimony submitted to the Texas Railroad Commission ahead of Tuesday’s hearing.

"A Texas proration appears unlikely to improve market conditions – and could become a precarious and slippery slope, as we have seen from other recent attempts to curtail production,” Foreman said. “The United States needs Texas to be prepared to ramp back up quickly when COVID-19 fades and thereby send OPEC+ the message that U.S. production led by Texas can and will endure."

The U.S. Energy Information Administration projects that U.S. crude oil production will fall to 11.8 million barrels per day in 2020, down 500,000 barrels from 2019.

Read Foreman’s full testimony here.

API represents all segments of America’s oil and natural gas industry. Our more than 600 members produce, process and distribute most of the nation’s energy. The industry supports more than ten million U.S. jobs and is backed by a growing grassroots movement of millions of Americans. API was formed in 1919 as a standards-setting organization. In our first 100 years, API has developed more than 700 standards to enhance operational and environmental safety, efficiency and sustainability.


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