The Railroad Commission does what?

By JAMES OSBORNE Published: 22 April 2013 11:02 PM
AUSTIN — The name is responsible for decades’ worth of quizzical looks.
The agency that ruled over global oil prices for much of the 20th century and still sets the standard for drilling rules worldwide bears a moniker that sounds like it should be overseeing train conductors, not roughnecks.
But will the Railroad Commission of Texas get a new name?
Legislators are pushing to rebrand it the Texas Energy Commission to clear up confusion about what the agency, more than 120 years old, does.
“We’re not going to be selling tickets on the railroad anymore, I guess,” quipped Rep. Jim Keffer, R-Eastland, chairman of the House Energy Resources Committee, at a meeting earlier this month.
For the record, the Texas Railroad Commission has not had significant authority over railroads for almost three decades.
But the name has persisted, despite repeated legislative efforts to change it. Even as momentum seemed to grow this time around, the bill to reauthorize the Railroad Commission was stripped of the name change provision before it left the House Energy Resources Committee.
Supporters maintain that the new name will be back on the bill before it goes for a final vote before the House.
The tie that binds

Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University, theorizes that the attachment to the name is out of respect to the agency’s vaunted and colorful history.
“Within the industry, everyone knows it,” he said. “From the early days, the Railroad Commission was the standard. When OPEC was created, it looked to the Railroad Commission.”
The commission was created in 1891, when James “Big Jim” Hogg became governor. Hogg, as Texas attorney general, had spent years battling what he called the railroad’s monopolistic practices, according to the state’s “Railroad Commission: An Informal History Compiled for Its Centennial.”
His new Railroad Commission quickly took up the cause, fixing the rates that railroad companies could charge and setting itself up for a lengthy court battle that ended in 1894, when the U.S. Supreme Court upheld the commission’s authority.
In the meantime, Texas was on its way to its first oil boom. The Spindletop well in Beaumont started gushing in 1901, and soon wildcatters were pouring in from across the country. Before long, creeks were filled with oil, fires raged across rigs, and prices dipped and dived day to day as drillers flooded the market.
By 1919, the Legislature had seen enough and ordered the Railroad Commission to rein in the drillers.
Almost 100 years later, Texas is at the epicenter of another oil boom. Drilling numbers are at levels not seen since the mid-1980s, and to keep up, the Railroad Commission is undergoing what its chairman, Barry Smitherman, has called a modernization.
Smitherman has argued that just as regulations need to adapt to evolving hydraulic fracturing techniques, the name needs to better reflect the agency’s mission.
“I got an email from someone the other day complaining about being caught at a railroad crossing guard,” he said.
A brand name

But some influential political figures would just as soon see the sign over the commission’s Austin offices stay the same.
At a hearing on the Railroad Commission’s sunset review earlier this month, legislators questioned whether they would confuse energy executives in Belgium and Saudi Arabia by tinkering with a name that has become a global brand.
“I hate name changes,” said Rep. Tom Craddick, R-Midland, the former House speaker.
Even among those barely old enough to remember Texas’ last oil boom three decades ago, the Railroad Commission brand retains a certain charm.
At the sunset hearing, Rep. Gene Wu, D-Houston, who at 35 is one of the House’s younger members, said he didn’t care about the name one way or the other — before thinking better of it.
“Well, I kind of like the name. It’s old-timey,” he said.
Follow James Osborne on Twitter at @osborneja.
Stops in Railroad Commission history
1891: The Texas Legislature establishes the Railroad Commission of Texas to oversee “rates and operations of railroads, terminals, wharves and express companies.”
1901: Capt. Anthony Lucas sets off an oil boom when he hits a “gusher” with the Spindletop well near Beaumont.
1910: The surge in drilling in Texas and Oklahoma brings oil prices down to half of what they were a decade earlier. In some Texas towns, oil is selling for 3 cents a barrel, cheaper than a cup of water.
1919: The Legislature assigns the Railroad Commission authority over oil and natural gas production with the intent of “conservation” and “limiting waste.”
1931: A federal court declares the Railroad Commission’s attempt to control oil production invalid. After production skyrockets in East Texas, Gov. Ross Sterling orders the National Guard to shut down wells.
1932: The U.S. Supreme Court upholds states’ ability to control oil production.
1960: Iraq, Kuwait, Iran, Saudi Arabia and Venezuela form the Organization of the Petroleum Exporting Countries.
1970: U.S. oil production peaks at more than 10 million barrels a day, beginning a decades-long decline.
1973: OPEC declares an oil embargo and raises prices 70 percent, establishing dominance over the global market.
1980: The U.S. government deregulates the railroad industry, and the Railroad Commission gives up all economic authority over industry within four years.
2000: Oil production in Texas falls below 400 million barrels a year, the first time since 1935.
2005: The Legislature hands railroad safety oversight to the Texas Department of Transportation, removing the last of the Railroad Commission’s authority over the its namesake industry.
2012: Hydraulic fracturing techniques are applied to “tight” oil fields. Production climbs to more than half a billion barrels a year, an almost 50 percent increase over 2010.
SOURCES: Railroad Commission of Texas; Texas State Historical Association; U.S. Energy Information Association
The Railroad Commission of Texas
Chairman: Barry T. Smitherman (appointed 2011/elected 2012)
Commissioners: David Porter (elected 2010) and Christi Craddick (elected 2012). The commissioners serve six-year terms.
Meetings: The commission meets twice a month in the William B. Travis Building in Austin.

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