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Flaring burns Texas economy

June 11, 2020
Tom Sanzillo and Suzanne Mattei and Seth Feaster
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Key Findings

Flaring — the venting of unneeded natural gas into the air — is a waste of natural resources and money. If the amount of gas flared in Texas in 2018 had been sold on the market, it would have brought $749.9 million to Texas oil producers.

Determining how to minimize waste is not only a matter of common sense, it is a critical element of the legislative mandate of the Texas Railroad Commission.

Executive Summary

On May 5, 2020, the RRC abdicated its statutory responsibility by rejecting a motion to curtail oil production based on economic waste without a serious discussion of flaring. The connection between flaring as evidence of oversupply (and low prices as evidence of the same) escaped scrutiny. The underlying cause of the flaring is an oversupply of gas and oil — a condition that preceded the pandemic and the price war between Saudi Arabia and Russia. The RRC and most of the industry believed the way to relieve these immediate symptoms of oversupply was to treat another symptom, the diminishing size of oil storage capacity. The RRC chose a path of simply relying on individual company and industry pledges to improve storage capacity. In so doing, the commission ignored the more basic and difficult challenge it faces — managing the decline of the oil and gas sector in Texas while supporting overall growth in the Texas economy.

Tom Sanzillo

Tom Sanzillo is Director of Financial Analysis for IEEFA. He has produced influential studies on the oil, gas, petrochemical and coal sectors in the U.S. and internationally, including company and credit analyses, facility development, oil and gas reserves, stock and commodity market analysis, and public and private financial structures. He also examines such areas as community and shareholder activism, institutional investment, public subsidies and Puerto Rico’s energy economics.

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Suzanne Mattei

Suzanne Mattei is an attorney with over 30 years of experience in public interest law and policy. She has analyzed the Federal Energy Regulatory Commission’s policies related to interstate pipeline approval. She has also conducted research on blue hydrogen, petrochemical projects, gas flaring and fossil fuel extraction on public lands.

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Seth Feaster

Seth Feaster is an Energy Data Analyst whose work focuses on the coal industry and the U.S. power sector.

Before joining IEEFA, he created visual presentations at the New York Times for 25 years with a focus on complex financial and energy data; he also worked at The Federal Reserve Bank of New York. 

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