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The Impact of Regulation on Texas Oil and Gas Production

The oil and gas production industry operates in a tough position. On the one hand, oil and gas production are critical economic drivers in the United States. Oil and gas generates hundreds of thousands of jobs and contributes 8% of the U.S. Gross Domestic Product, according to the American Petroleum Institute.

On the other hand, the Texas oil and gas  industry is constantly grappling with environmental concerns and the threat of even more regulation of their activities by the Texas Railroad Commission and the federal Environmental Protection Agency. The oil and gas industry is already highly regulated, and yet state and federal government agencies consistently add more regulations on top of those that already exist. One of the recent set of regulations that the industry is facing are rules issued by the EPA concerning reducing methane emissions.

The reasons behind state and federal regulations are often good ones, for instance, concerns about air quality. On the other hand, some regulations are too far-reaching and overly aggressive. For example, where regulations require the adaptation of new technology designed to be cleaner and more environmentally conscious, the high cost of implementing those regulations can force smaller oil and gas producers out of business. That means fewer jobs and a decrease in taxes on oil and gas production that are paid to local governments. Another problem, with federal regulations in particular, is that they are often based on faulty (and sometimes nonexistent) science and take a one-size fits all approach that does not take into account local conditions, technologies and regulations. We end up with a mess!

Reasonable regulations are important, and environmental concerns are important, but we need to make sure the regulations we enact are scientifically based, that they really accomplish what they are intended to accomplish and that we consider the true costs to taxpayers.