There are a number of parties raising the idea of Texas and other states reimposing “prorationing” rules. Prorationing is when the state (in Texas, it is the Railroad Commission — don’t ask, it’s a long story) tells producers of oil and gas, either on a producing field by producing field or even well by well basis, what percentage of the potential production they are allowed to produce. In other words, it is the US method for imposing OPEC style production cuts on individual producers.
The original basis actually was a more sound structure — Texas had limited natural gas pipeline facilities and processing capacity and so rather than having people flaring natural gas (burning it at the well so you could keep producing the oil), they imposed production limits to keep the production in balance with the off take capacity. There are also limited uses for when wells owned by two (or more different firms) are tapped into the same common reservoir — in that case, the prorationing rule is designed to constrain the competing parties from just going flat out to see if the can “induce” the oil to go to their well.
But the current call is should just be called what it is “centrally planned economy to set prices”. If it was done by companies, it would be called price fixing. But no, the oil companies are really asking for Soviet style central planning to allocate production to keep prices up. The neat thing is it would bypass any price fixing rules — “see, we would keep producing but the State of Texas said we can’t”. Cool, Coronavirus is now an excuse for industry wide price fixing. See, this is just a valid response to the pandemic. Oh, but none of you little people should be asking for money — ugly “socialism”.
I want Faux News to do a nice piece on how the oil industry in the US wants good old Soviet style centrally planned communism and therefore, as of today, Faux news and the Rethuglican Party will never, ever use the term “socialism” as a pejorative.
Any bets I get my wish?