Editorial Roundup:

The Dallas Morning News. April 17, 2020

Texas oil regulators consider curtailing production in the name of preserving a competitive industry

Forgive us if you will, but in talking about oil in Texas today we’ll start with one aspect of the industry that we suspect many would like to do away with or just pretend doesn’t exist. Energy remains a business where the animal spirits of the economy are never far off. Prospecting for profits in rocks far below the surface requires taking financial risks, driving innovation to outcompete other firms and, yes, it even involves risking financial ruin for individuals and companies as they make bets about what they’ll be able to make of the energy they pull from the ground.

This is all top of mind because the energy industry across the globe and here in Texas is facing a reckoning. In case you haven’t realized it because you haven’t filled up your SUV recently, oil prices are scraping the bottom of the barrel. We’re in the midst of an oil glut as Russian and Saudi wells had flooded the markets just as economies were about to be shuttered across the world in response to the coronavirus pandemic. As demand fell and supplies increased, the bottom fell out of the oil business.

How far did it fall? In January, West Texas Intermediate oil fetched $60 a barrel on the world’s market. This week, the price dropped below $20 a barrel. Prices in regional oil patches are even lower.

No one expects you to cry for the oil and gas industry, but it’s nonetheless true that prices in that range will be ruinous for more than just the irresponsible risk-takers. In fact, even players with strong balance sheets are noting that it might put a dent into the oil and gas business that could take a generation to work out.

How so? The oil and gas business is a massively complicated industry, but in broad strokes there is a dynamism among American producers that has often driven innovation. Unlike, say, Saudi Arabia, there isn’t a massive, government-sponsored energy company that both dominates production and uses its profits to underwrite the workings of the country’s national affairs. We don’t quite have a pure free-market oil business in the U.S. as the oil and gas business has always been regulated by various levels of government, but we have a free enough system to empower anyone with a good idea who can raise capital to spur innovation.

Now we have a unique set of circumstances that has crashed the system and could wipe out both weaker firms and firms that would otherwise be strong enough to thrive. These circumstances involve, first, two monopolistic players who decided to wage a price war, followed by a global pandemic that has stopped the free functioning of economies far and wide.

To carry the industry through this calamity some - including Pioneer Natural Resources - are pressing the Texas Railroad Commission to curb production. The commission’s power to impose such restrictions dates back to the 1930s, though it hasn’t exercised that power since the 1970s. The aim is similar to the thinking behind the production curbs worked out globally over the past week - curbs that involved OPEC (Organization of Petroleum Exporting Countries) and other producers cutting back as the Russians and Saudis stand down from their price war. Not incidentally, the curbs were agreed to after President Donald Trump stepped in to win the support of Mexico and pledged to take up some of the cuts our southern neighbor was being asked to agree to.

Some producers hope the Railroad Commission will implement curbs and that will spark other states to do likewise and thereby temporarily drive down oil production in a way that is more evenly distributed than simply allowing prices to spur producers to cut back production and that’s significant enough to buoy prices. Pioneer has suggested a 10% production cut across the board in Texas.

The three elected Railroad Commissioners, Wayne Christian, Ryan Sitton and Christi Craddick, are free-market conservatives. And they met this week to hear from dozens of industry insiders on what to do. It’s anyone’s guess whether they’ll want to act to ensure there is more competition on the other side of this crisis, and if so, if they will choose to use the heavy hammer bequeathed to them from a different era to force production cuts, or if they settle on more subtle rule changes to rein in the industry.

Our view is that innovation like fracking has changed the world by giving the United States the upper hand in energy markets. That puts the Russians and others back on their heels. It also empowers and frees the American consumer. It would be wise for the commissioners to focus on ensuring that there is a robust and competitive industry after COVID-19 recedes into the deeper recesses of public concerns, and to show the world what firm, fair oil regulation looks like in a competitive market.

There are a lot of ways to do that. One, of course, is to be mindful of setting precedents that can lead to long-term regulations no one now intends. So if the commission imposes blanket curbs now, it needs to be careful in its justifications. A future commission could expand on what’s done now, so this commission should be clear in explaining its decisions were based on short-term and extraordinary conditions.

The commission has other options, too, of course. It could offer regulations to the way the market functions designed to protect the industry from irreversible damage during a crisis. Well-functioning markets operate within sets of rules that allow prices, innovation, and value-creation to drive outcomes, and it could be that the Texas oil industry needs some well-crafted regulations to ensure the oil market here works that way. For example, the Railroad Commission could move against “flaring,” the practice of burning off natural gas that’s a byproduct oil production, and it must be flared in areas that lack the pipeline infrastructure to carry the natural gas to market. Reducing flaring can also curb the associated oil production, albeit in a less evenly distributed way than an across-the-board cut.

Whatever it decides, we’d hope that the commission prioritizes preserving a dynamic and competitive industry rather than allowing this market shock to significantly hamper the Texas oil industry or even prompt large survivors to move their investment elsewhere in the world. After this is over, we’d like to see the industry’s animal spirits alive and well and running free.

___

Houston Chronicle. April 17, 2020

We know who really decides when Texas gets back to work. It’s not President Trump or Gov. Abbott.

In the recent debate over who has the authority to “reopen” the coronavirus-stricken U.S. economy - the president or the state governors? - the textbook answer is “the governors,” with extra credit for citing the 10th Amendment to the Constitution.

The more accurate answer, however, is neither.

The real decider, to quote another part of the Constitution, is “We the people.”

Until consumers feel safe enough to dine at restaurants, catch a flight or spend some time at shopping malls, elected officials can do little to get the economy into first gear, let alone out of reverse.

When a Gallup poll recently asked people how soon they would “return to your normal activities” once restrictions were lifted, only 20 percent said they would do so immediately. Seventy-one percent said they would “wait to see what happens with the coronavirus.”

That’s why any plan for restarting the economic engine by easing or lifting social distancing restrictions must be based on scientific and medical data sound enough to assure the public that it is safe to leave the house, re-enter the marketplace and send the kids back to school.

Such a plan should include:

A robust testing regimen with enforced isolation for those who test positive and “contact tracing” and notification of those they may have exposed.

Local medical facilities that are properly staffed and equipped to handle new outbreaks and treat cases, including those requiring hospitalization.

Businesses that are retooled and equipped to better shield workers and customers, along with schools that are set up, physically and conceptually, to protect teachers and students.

Safeguards for the most vulnerable, especially those in nursing homes.

A continued push by scientists and pharmaceutical companies to find therapeutic treatments and vaccines while the rest of us follow mitigation protocols.

Anything less increases the risk of new COVID-19 flare-ups and makes the recovery longer and slower as consumers have to start the stay-home process all over again. Many of these things will have to be done in stages and more slowly in some parts of the state regardless of how many people demand a more sweeping response.

This does not downplay the damage being done to the nation’s economy by shutdowns and stay-at-home orders. More than 22 million people have applied for unemployment benefits over the past four weeks, including 1 million in Texas. U.S. retail sales plunged an unprecedented 8.7 percent in March, and JPMorgan Chase economists predict the U.S. economy will shrink by a previously unthinkable 40 percent in the quarter that began this month.

Those calling for quicker action have legitimate concerns about the long-term health and well-being of millions of people, pointing to the Great Depression landscape of chronic unemployment, widespread homelessness, hunger and deaths of despair.

But it doesn’t have to be a choice between lives and livelihoods. A safe, strategic reopening that adequately addresses health concerns while limiting the spread of the virus will provide both.

The persistent obstacle for the nation, and especially for Texas, is coming up with an effective testing program. The United States has lagged well behind other countries in per capita testing. Texas has been at or near the bottom of even the lackluster U.S. testing rates, which leaves the state with a lot of unknowns about how widespread the virus is here and whether the problem is getting better or worse.

Gov. Greg Abbott is scheduled to release details Friday on how he thinks the state should go about getting businesses open and putting people back to work.

“This is not going to be a rush-to-the-gates, everybody-will-be-open-all-at-once (situation),” he said at a news conference Monday. “We have to reopen in a way in which we are able to stimulate the economy while ensuring we can contain the spread of COVID-19.”

That’s the right approach. And a tough one. We applaud the governor for resisting calls for a rushed reopening and urge him to maintain the same caution in his announcement Friday. The next step is to give Texans concrete evidence of increased testing and contact tracing - and better transparency in releasing the data that would boost confidence - testimony from the medical community that it is prepared to respond and guidance for businesses to operate responsibly.

The governor can announce a grand reopening, but the test is whether people will show up.

___

San Antonio Express-News. April 14, 2020

Abbott must provide cure to voting in a pandemic

Gov. Greg Abbott would be remiss if he fails to call a special legislative session to address myriad concerns threatening the primary runoffs and November general election.

Anything short of legislative action on how elections will be carried out during a pandemic will result in legal challenges that will continue past Election Day.

Executive orders and “guidance” memos from state election officials are simply not enough to ensure a smooth election process in what the New York Times is calling “the biggest voting rights battle since the passage of the Voting Rights Act of 1965.”

The Texas Democratic Party has already filed two election lawsuits challenging the state’s absentee ballot regulations. The first was filed last month in state court. The most recent lawsuit was filed in San Antonio federal court.

Recently, the state’s director of elections sent elections administrators in all 254 counties guidance on dealing with absentee mail-in ballots, telling the administrators they could be less rigid in making this practice available. On the surface, this sounds promising, but upon deeper reflection, it’s not enough.

This guidance is neither a mandate nor does it create new policy, the Express-News reports. It also creates the potential for patchwork regulations as some counties may broaden vote by mail while others might not. How is that reasonable for statewide elections?

To be clear: There is value in expanding mail-in voting, especially during a public health crisis. We support this effort. No voter should be disenfranchised out of concern for catching COVID-19. That’s why the state - under Abbott’s leadership - needs to craft a bipartisan plan.

If more mail balloting is going to be encouraged - as it should be - there needs to be a legislative directive ensuring everyone is eligible for that option. Texas has one of the strictest laws on mail balloting in the country, limiting access to voters 65 or older, people who have a disability or illness, those who will be out of the county during the election period, or those who are confined in jail but still eligible to vote.

As a result, only about 7 percent of Texans cast mail ballots.

Only eight states conduct elections entirely by mail or are in the process of transitioning to mail voting only. They all spent years making the move. A sudden increase in mail voting would be overwhelming for many elections departments. Even large urban centers, such as Bexar County, could experience difficulties.

Consider the local numbers: During the March primaries in Bexar County, 23,000 ballots were mailed out and 18,000 ballots were returned. County Elections Administrator Jacque Callanen said her department can readily handle 60,000 mailed ballots in-house and up to 120,000 ballots with current staffing. But that’s if she can get more space to ensure social distancing guidelines are met.

Elections administrators also need time to order supplies if the state is going to ease mail-balloting regulations. Public education campaigns need to launch to educate the public on voting-by-mail procedures to ensure all pages of a multipage ballot are returned and those ballots are returned in a timely manner.

Extension of deadlines for mail ballots must be considered. Under current election law, ballots cast locally cannot be counted if they arrive more than one day after the election. Military members and expatriates are allowed extra time. There is growing concern about the timely arrival of ballots cast in countries that have curtailed much of their international mail due to limited flights available to transport the mail.

Last week, President Donald Trump voiced strong opposition to expanding mail voting.

“Republicans should fight very hard when it comes to state wide mail-in voting,” Trump tweeted. “Democrats are clamoring for it. Tremendous potential for voter fraud, and for whatever reason, doesn’t work out well for Republicans.”

But the reality is voters are scared and this transcends partisanship. Voters don’t want to compromise their health by voting in person. And voter fraud is often a red herring.

If the state is going to expand access to mail ballots - and it should - it needs to do it right. The details need to be laid out in black and white. We can’t afford a patchwork of local rules on voting by mail. Abbott needs to lead a bipartisan effort to ensure all Texans have access to mail-in ballots and all counties follow identical rules on Election Day. This is about democracy and health, not partisanship.

___