You may have read that last week the Organization of Petroleum Exporting Countries (OPEC) announced they had agreed to cut oil production by about 1.2 million barrels a day. For decades OPEC has been the organization we’ve all loved to hate. But who was the first to come up with the idea of limiting oil production to force prices up?
You might be surprised to learn it was us. Specifically, the Railroad Commission of Texas (or Texas Railroad Commission) was established on April 3, 1891, originally to regulate railroads, terminals, wharves and express companies. The Commission took over responsibility for regulating oil pipelines (in 1917), oil and gas production (1919), natural gas delivery systems (1920), bus lines (1927), and trucking (1929). From the 1930s to the 1960s it largely set world oil prices, which was thought necessary when the East Texas oil boom of the 1930s caused the price of a barrel of oil to drop to 25 cents. The Commission’s involvement in regulating oil production is quite a story in itself. Then OPEC was formed in 1960 and became the dominant pricing organization after 1973. Since then, the Commission has focused on on oil, gas, mining, propane, and pipelines, setting monthly production allocations. By the way, it no longer regulates railroads.
So before you criticize OPEC, remember the history of the Railroad Commission of Texas.
The Commission’s official website is at http://www.rrc.state.tx.us/. A good summary can be found at https://en.wikipedia.org/wiki/Railroad_Commission_of_Texas.