Texan is key figure in working on stabilizing oil markets

Bloomberg/Fuel Fix:
In just a matter of weeks, Ryan Sitton went from being a lame-duck commissioner of an obscure Texas agency to one of the key figures in a global effort to save the oil market from plummeting prices.

Sitton, a Republican who lost the primary election for his own seat on the Texas Railroad Commission just one month ago, said Thursday that he had spoken with Russian Energy Minister Alexander Novak about cutting global oil supplies and planned to have a conversation with Novak’s counterpart in Saudi Arabia. Two weeks ago, he spoke with OPEC Secretary General Mohammad Barkindo and was invited to attend a meeting this summer in Vienna.

To be clear, these kinds of exchanges between state-level regulators and national energy ministers about capping global oil supplies are not common.

In fact, if Sitton attends that OPEC meeting, he would be the first member of the state Railroad Commission to do so since the 1980s. He’s earning a seat at the table just as the OPEC+ alliance, which includes Saudi Arabia and Russia, tries to form a global coalition to cut output, put an end to a war over market share and stem the rout in crude prices brought on by the Covid-19 pandemic.

A deal with non-OPEC+ nations including the U.S. would set a historic precedent. President Donald Trump hasn’t publicly said whether the U.S. is willing to cut its own domestic production. He met with oil executives at the White House on Friday to discuss ways to shore up the industry.

In the absence of federal action, Sitton -- an oil and gas engineer and self-proclaimed energy markets expert who leaves office in January -- became the face of America’s response to a global battle for oil market share.
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The power to manage the state’s oil production has been there all along. Following a slump in the oil market in 1931, the Texas Railroad Commission started periodically implementing a process known as pro-rationing to bolster prices. That ended in the early 1970s, just as OPEC, which had modeled itself on the commission, was rising to a dominant position in the oil market.

“There’s this regulatory authority that’s just sitting there unused for all these years but all of a sudden becomes relevant again,” said James Coleman, an energy law professor at Southern Methodist University. “The Texas Railroad Commission, although obscure, has always been an important international player.”
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There is more.

US producers are already responded to the market by cutting their own production as President Trump noted in his news briefing yesterday.  I think Sitton is also in contact with state regulators in other oil-producing states to try to get a deal that will stop the irrational actions of Russia and Saudi Arabia.  Trump should also consider imposing a tariff on foreign oil if those producers do not work out a deal.

The price of oil has been moving higher on optimism that a deal will be reached.

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