The state of Texas is talking with the folks who brought you the oil embargoes of the 1970s, looking for ways to cooperate with the OPEC cartel in a bid to revive its struggling oil industry.
By itself, Texas is still the seventh largest producer in the world, but its oil, real estate and banking industries have been devastated since a 1986 oil price collapse.Texans "cannot continue to bury our heads in the sand and hope everything is going to be OK," says Kent Hance, one of the three members of the Texas Railroad Commission, which regulates oil production in the state.
Hance met earlier this month with Rilwanu Lukman, the president of the Organization of Petroleum Exporting Countries, and discussed the possibility that his state and the cartel would cooperate. More contacts are planned.
Hance told Harte-Hanks newspapers on Tuesday that cutting Texas production to hold up prices "is one of the things that has to be considered. It would be one of the items we would discuss" at OPEC's April 23 meeting in Vienna.
"We can do it to prevent waste," he said in an interview Thursday from Austin.
From the 1930s to the early 1970s, Texas played the role that Saudi Arabia can play today acting as the world's swing producer, whose production stabilizes the price of oil. The commission, by controlling the amount of Texas oil produced, thus had a significant degree of control over prices.
That influence dissipated with the rise of the OPEC cartel and since 1972, the Texas commission has allowed wells in the state to produce at 100 percent of capacity.
OPEC demonstrated its clout in 1973, when 11 Arab member nations, angered over the Arab-Israeli conflict, slapped the United States with an oil embargo that produced gasoline lines all over the country.