ustxtxb_obs_1982_01_29_50_00018-00000_000.pdf

6 1 oil explorers that they find the big fields. And here the book skitters off into “an ode to independent oil producers.” The importance of independent oil men to Texas, its economy, and more oil reserves, divides into three questions: *Did the Commission need to subsidize and preserve the pool of established independents? *Did “independents” find the big fields? *Will they in the future? The frenzied oil play in Texas indicates that there is an unlimited pool of potential oil entrepreneurs. Inactive or bankrupt independents and their employees, executives and technicians from the major oil companies, people outside the industry with no experience there is no shortage of oil boomers. The evidence Prindle musters to show independents made the bulk of past discoveries is unconvincing. What about the future? What evidence exists to suggest that strippers, marginal oil producers, and independents who have been nurtured for the last 35 years at public expense Prindle’s entrepreneurs will make the large finds today? Prindle offers none. But the argument that an economy “depends” on a particular industry or business group is the one put forward by all groups of endangered small businessmen crying for government aid. Ironically, that argument comes full circle here. It was also advanced in 1890 by the group who got the Railroad Commission established the cotton farmers. They argued that Texas’ economy depended on them, their industry, and their product. Cotton declined as Texas’ main industry and was replaced by another: petroleum. It too faces a decline sometime during ‘the next few generations. Prindle advances an old theory to support his argument that independents deserve government support. During the in Houston ?? 485 LUXURIOUS ROOMS & SUITES!! Across From Texas Medical Center Convenient to Everything: 5 Min to Domed Stadium & Domed World Rice Stadium Zoo Golf Course Fat Stock Show TIDES II MOTOR INN 6700 South Main, Houston CALL 713-522-2811 1930’s, an economist, Joseph Schumpeter, developed a theory of business cycles, innovation and risk-taking. He argued that entrepreneurs appear with an upturn in the business cycle and are re. sponsible for new growth and economic progress. Then, when the cycle ebbs, they recede with it. Some survive for the next cycle. Some do not; they disappear as market action dictates. But none survive with the help of government. Schumpter, a free market economist of the Austrian school, would have been appalled at the use Prindle makes of his theory to justify government interference in the market. This slight bending of theory, however, is insignificant compared to the industry’s own mental gymnastics. Over the years, the Railroad Commission and the oil and gas industry in Texas showed us, along with the OPEC countries, how government can erect a highly regulated structure on complex commercial activities, with complete acceptance from the industry. At the same time, Petroleum Politics, as no other, relies on the most extreme anti-government, free market arguments to rationalize its political activities. Prindle devotes a chapter to explore the industry’s schizophrenia, this “display of Alice-in-Wonderland reasoning.” How can an industry so heavily favored by government support and policies that made it rich lay claim to being market controlled? How can it, with a straight face, oppose government support for other groups? Does this inconsistency have a logical explanation? Prindle explains it away as “intellectual confusion”; a “romanticised” notion that fogs “the industry’s view.” Not convincingly, however. Hypocrisy Texas oil men, subsidized and protected in the past, now enjoy explosive price increases decreed by a cartel created by yet another government. It will be hard for people who suffer from cuts in national, state and city budgets to accept Prindle’s conclusion that the inconsistency is simple, innocent “confusion.” The word “hypocrisy,” not “confusion,” seems more appropriate to explain the industry position. Prindle also concludes that the commission failed one of its major responsibility. He flunks the commission for the way it conducted business, criticizing particularly the private workings of this public body: “An examination of the politics of the Railroad Commission is not comforting to partisans of democratic accountability,” he writes. Citing the method and purpose of both the Railroad Commission and OPEC, Prindle says: “In both cases, administrative agencies acting to control supply, and thus price, have made decisions in an atmosphere divorced from a consideration of the opinions of consumers. OPEC does not pretend to be democratically accountable, but it is not composed of United States citizens. The Railroad Commission has no such defense.” The connection between the politics of petroleum and the commission’s policies Prindle finds to be money: campaign contributions. After a detailed study of the last 12-winners of commission elections, he says: “at bottom the politics of the Railroad Commission is still the politics of money.” Prindle’s seven episodes reveal yet another pattern in commission policy: It had more success with oil problems than gas. If instead of 1930, the history had begun 10 years earlier, the commission’s inability to handle gas problems would have been even more apparent. In 1920 the Legislature enacted the Cox Act, and gave the commission appellate regulation of natural gas transmission and distribution. For the next 10 years, the commission ignored this responsibility. It refused to protect consumers from excessive gas rates, despite numerous complaints about gas prices and supplies. Only after the new members were elected to solve the East Texas oil crisis did the Commission assume regulation of gas utilities. Leaving aside Prindle’s conclusions, an objective review of the commission’s performance reveals a questionable record of achievement for a public agency. By Prindle’s own analysis, the commission failed three episodes: slant wells, Coastal States contracts, and gas proration. \(A fourth episode, unitization, could also be included in this list of failThe successful episodes proration and well spacing \(all closely related to were concluded involuntarily; the commission and industry acceded to take correct action only under threat of federal intervention. The industry accepted the state as regulator of proration, well spacing, and gas flaring, expecting to dictate the, way it was done. What does Petroleum Politics and the Texas Railroad Commission tell us about the future of this state agency? Prindle sees little change in the commission’s operation and policies: “The state and the nation should anticipate a future Railroad Commission that operates much as it has in the past.” The politics -= and the money of petroleum control Texas. At least it will until oil follows the decline of cotton. 18 JANUARY 29, 1982