Texas Electric Grid Valued Large Customers, over Ordinary Rate Payers

February 21, 2021

Chief Exec, “Judge” as they say in Texas, of Dallas County, interviewed while the disaster was ongoing, above.

In an unregulated grid, customers, ratepayers, are not the focus. Least of all is there a concern about what happens to the average ratepayer in an extreme situation.

Below, the Texas Railroad Commission, as the video above notes, controls the flow of gas around the state.
A fascinating footnote of history is that, it was this Commission that Arab petro states looked at as a model, when they created OPEC.


BUCHELE: Eventually, the Railroad Commission gained control. And its power grew. It started working with other states to set production levels and prices, not just in the U.S. but around the world.

DAVID PRINDLE: So from the 1930s until 1972, essentially, the Railroad Commission was the most important institution in the world of oil.

BUCHELE: David Prindle is a government professor at UT Austin. He says in 1951, the head of Venezuela’s energy sector looked to Texas for inspiration.

PRINDLE: He hired the chief engineer of the Railroad Commission, named Jack Baumel, to come to Venezuela and show him and then show the oil minister of Saudi Arabia how it was done.

BUCHELE: It was the start of the Organization of the Petroleum Exporting Countries.

PRINDLE: OPEC was explicitly modeled on the Texas Railroad Commission.

BUCHELE: As more oil was found around the world, OPEC gained power. And the Railroad Commission lost it. The commission stopped capping Texas production in the early ’70s. And it’s never even considered it again until now, amid an economic crisis and a huge glut of oil, a lot like they had back in 1931. For NPR News, I’m Mose Buchele in Austin.


During the oil boom of the 1930s, large oil producers were worried that independent drillers were over-supplying the market (much as OPEC has been accused of doing today). To control production and stabilize prices the Railroad Commission issued “pro-ration” orders to limit production from each oil well.  

When independent oilmen in the East Texas field refused, the Governor of Texas went so far as to declare martial law and send in troops. Some said oil prices would rise “as the point of a bayonet.”

It was a dramatic gesture but, in the long-term, it worked. The Railroad Commission, in partnership with other oil producing states, controlled oil production (and by extension, prices) for decades. 

Then, in the 1950s, the oil minister of Venezuela decided that if the Texans could do it, so should other oil producers.  

“He hired the chief engineer of the Railroad Commission, named Jack Baumel, to come to Venezuela and then show the oil minister of Saudi Arabia how it was done,” says Prindle. “OPEC was explicitly modeled on the Texas Railroad Commission.” 

Regardless of whether this was (as OPEC members might say) a necessary market correction or (as Porter has said) a “war,” one fact is commonly lost in the rhetoric: The Railroad Commission of Texas helped create OPEC. 

But to the minds of some in Texas, it was, as previously stated, “war.” 

Tuesday is Election Day. One of the positions up for vote is an empty seat on the Railroad Commission of Texas. Despite its name, the three-member Railroad Commission of Texas actually regulates oil and gas in the state.  The agency is sometimes criticized for having a light touch when it comes to regulating the industry on regulations. But that hasn’t always been the case. And in a strange way, the agency’s more heavy-handed past relates to exactly what happening now in the oil and gas industry, with all these low gas prices we’ve been enjoying.


One Response to “Texas Electric Grid Valued Large Customers, over Ordinary Rate Payers”

  1. jimbills Says:

    That’s Judge Clay Jenkins, an actual judge. He’s been one of the few voices of reason in this area during the pandemic:

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