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As the Texas Railroad Commission falls from global oil dominance, the energy crisis of the 1970s strikes and one gas company cuts power to millions. What comes next brings plenty of political intrigue, and sets up a divided system of energy regulation in Texas unlike anywhere else in the country. We talk about what that means for everyday people and energy reliability right up to today.
The full transcript of this episode of The Disconnect: Power, Politics and the Texas Blackout is available on the KUT & KUTX Studio website. The transcript is also available as subtitles or captions on some podcast apps.
Mose Buchele Previously on The Disconnect.
Kent Hance Had they not acted foolishly and got in a fight, they would not have had the regulation that would have saved ’em.
Mose Buchele They kept the prices up, which made the big guys happy.
David Prindle And they made rules that favored the little guys, which made them profitable. And therefore everybody began to love the railroad commission.
Mose Buchele Now these new huge pipelines can move Texas gas all over the country.
David Prindle The glory days of the Railroad Commission. When it was truly, hugely important in the economy of the country, ended in 1972.
Mose Buchele We’re going to start this episode with a story that doesn’t have to do with energy, but I think it’s instructive. The man who told it to me thought it was instructive, too.
Lyndon Olsen And I’m assuming we’re recording here, which is fair.
Mose Buchele His name is Lyndon Olsen. Olsen has done a lot. He was a big insurance executive, a CEO. He’s a banker. He served as ambassador to Sweden when Bill Clinton was president. But back in 1973, he was a newly elected 26 year old Democratic Texas state representative from Waco. He says as a freshman rep, he pretty much knew his place.
Lyndon Olsen I just listened to Shut Up and Get him to back mic didn’t talk a lot. Tried to learn the rules process.
Mose Buchele And that’s what his story is about. Learning the process. It starts during that first term when he says an old man came to him with a problem.
Lyndon Olsen He said, I am such and such. I didn’t know maybe what in my district. I guess you’re just looking for somebody to help.
Mose Buchele The man said he owned land in central Texas that he leased to quail hunters.
Lyndon Olsen And I kind of live off the money. I get off leash and balance. Quite.
Mose Buchele But he had made a powerful enemy in the state Senate. Olson Olsen can’t quite remember, but the guy had either run against or supported an opponent of someone named Bill.
Lyndon Olsen Moore. Senator Moore, they call me Bill of breasts.
Mose Buchele And he said Moore had just got a bill through the state Senate to cut the quail season, where this guy lived down to just a few days.
Lyndon Olsen He’d gotten he’s mad at me and this is his bill and it’s going to ruin me. Oh, that was awful.
Mose Buchele So he decided to help.
Lyndon Olsen And so I and this little committee, the local government committee, chaired my first term.
Mose Buchele It turned out this quail hunting bill had to pass through that committee. And Olsen decided he’d help out the old man and kill the bill.
Lyndon Olsen As chairman. I wouldn’t give it a hearing.
Mose Buchele So the quail hunting bill was dead, and Olsen kind of moved on and didn’t think too much about it. But then he started getting phone calls, calls from his district, people and public institutions that relied on state money, state money that wasn’t getting to them either.
Lyndon Olsen Tuition equalization. Texas state technical interest to region 12. Oh, man. On their. Their appropriations were all being held up.
Mose Buchele The editor of his local paper called.
Lyndon Olsen Lynn we’re going to have to write up about this. Every state appropriations within your district are being held up, and it’s a problem. Highway department funds or Brazos river authority I mean it’s ugly.
Mose Buchele So Olson went to see the speaker of the House.
Lyndon Olsen As a speaker. Oh, what’s going on here? He said, well, you probably should go see Senator Moore. And I said, what do you mean? You need to go talk to him about it? And I said, do you know some I don’t know? So yeah, I think I do.
Mose Buchele Olson didn’t want to go. He said back then, the two different chambers didn’t have much to do with each other. But he finally made the walk across the Capitol to visit Bill Moore, the Bull of the Brazos.
Lyndon Olsen And I said, is there something we need to talk about? He said, yes, there is. He said, you know, I got a little bill doesn’t affect anybody but me. And they tell me, you got it killed. Is it the quail bill, etc. so that’s most important. Bill. Me. And he said, what are you doing?
Mose Buchele Is Olson thought about that old guy, worried about his livelihood.
Lyndon Olsen I said, well, sir, it frankly is a matter of principle.
Mose Buchele It was time for Olson’s first big lesson in politics.
Lyndon Olsen And he said, son, you need to learn how to rise above your principles.
Mose Buchele More on that later. Today we rise above our principles. We’ll be talking about the energy crisis of the 1970s.
woman Are you well to slow down to 50 miles an hour?
woman 2 No. Why not? Because of stupid.
Mose Buchele Dirty dealings in the world of natural gas.
David Prindle He sells what isn’t hisn and must buy it back or go to prison.
Mose Buchele And the tricky business of utility regulation.
Lyndon Olsen And it was hardball politics.
Mose Buchele I’m Mose Buchele. This is the Disconnect. Power politics and the Texas blackout. So our story so far has been about Texas energy and its regulation, how Texas oil, in a lot of ways, came to dominate the world, and how Texas called the shots in the global oil market. Starting after the Second World War and this week’s episode, we talk about how that system of control fell apart and how that meltdown led to the system we have today. I mean, you could call it all sorts of things. People say a deregulated I don’t know free market, what do you call it, Audrey? I mean.
Audrey McGlinchy That sounds good to me.
Mose Buchele Hey, everybody, it’s Audrey McGlinchy.
Audrey McGlinchy Glad to be back Mose.
Mose Buchele What do you think of opaque? Because I find myself saying, oh, it’s it’s a the system is opaque sometimes.
Audrey McGlinchy Yeah, it just sounds like you’re trying to sound smart. We can say, like, muddy complicated, complex, I don’t know.
Mose Buchele Fair enough. Fair enough. Okay. Whatever you’re going to call it we’re going to talk about how we got it right. And the standard story is that it starts with the energy crisis. And that goes back to the Organization of Petroleum Exporting Countries OPEC.
Audrey McGlinchy Remember OPEC was modeled on the Texas Railroad Commission. And in 1973 OPEC declared an oil embargo.
Mose Buchele The story goes that leads to shortages.
Audrey McGlinchy Yeah. And this initial oil shock is followed by another onw in 1979.
Mose Buchele And eventually Jimmy Carter wears a sweater. And deregulation happens.
Audrey McGlinchy We covered some of this back in season one.
Mose Buchele And it will come up again.
Audrey McGlinchy But our story this week starts before what’s known as the Arab oil embargo.
Mose Buchele Yeah, because there were energy shortages going on in the US before that happened. Natural gas shortages hit Texas right where the energy was coming from in 1972.
Audrey McGlinchy A lot of people have forgotten this, but not Monty Humble.
Monty Humble I remember quite well winter nights when we had to have extra layers of clothing and extra blankets because our gas heater just wouldn’t work. There wasn’t enough pressure in the pipe for it to work.
Mose Buchele Humble has spent decades working in energy, including with a legendary natural gas and wind magnate, T Boone Pickens. But in the early 70s, he was a young law student at UT Austin, and he was cold.
Monty Humble Oh yeah, it would get down to 20 degrees and you didn’t have any heat. So the only thing you could do was bundle up and, you know, if you were lucky enough to have a girlfriend, it was okay to sleep at night. But if you were by yourself, it was damn cold.
Mose Buchele Cold and single in there.
Audrey McGlinchy Oof! Same. All right, so Austin was not the only place without enough gas that winter. San Antonio, Corpus Christi, and a lot of smaller towns and cities were going through the same thing.
Mose Buchele And the reason was their gas supplier.
Audrey McGlinchy It was a company called Coastal States.
Mose Buchele It was a natural gas company that grew out of the South Texas oil fields.
Audrey McGlinchy It was founded by a guy named Oscar Wyatt, another colorful character in Texas oil and gas history. Wyatt realized there was a fortune to be made in cheap natural gas in South Texas.
Mose Buchele Back in the 60s, a lot of that gas was still just stuck there. And the reason goes back to pipelines.
Audrey McGlinchy Remember, during World War Two, they built big pipelines to carry that gas across the country. The big Inch and little big Inch. Well, it created a big market for natural gas that was just coming up with the oil in Texas.
Mose Buchele Those pipelines are regulated by a federal commission called Ferc. And back in the 70s, the feds had a price cap on the natural gas on those lines. They kept gas cheap.
Monty Humble Ferc, the Federal Energy Regulatory Commission, for years had exploited Texas gas for the benefit of the rest of the country by setting an artificially low price.
Mose Buchele Is good for gas consuming states, but bad for Texas industry.
Audrey McGlinchy But there was a way to get around those price caps, because within Texas, there were a ton of other pipelines that ran from oil or gas wells to homes, factories, power plants all inside the state.
Mose Buchele Those are called intra state lines, and they’re overseen not by the feds, but by the Railroad Commission. And they don’t have a price cap. The gas on those pipelines could sell for whatever people would pay for it.
Audrey McGlinchy So during the 1960s, this guy, Oscar Wyatt, he had an idea.
Mose Buchele He went to the owners of gas wells in South Texas and offered to buy more of their gas than the big pipelines would.
Monty Humble Which of course, the producers were happy to take.
Mose Buchele There were actually a lot of intrastate pipelines built around this time for just this reason. They didn’t cross state lines and so they were free of federal scrutiny.
Audrey McGlinchy FERC couldn’t go in and forced buyers and sellers to change terms or renegotiate. That was a big part of Wyatt’s sales pitch to natural gas producers.
Monty Humble And he planned up a lot of gas and then started marketing it to cities and to gas utilities and to electric utilities.
Mose Buchele Like we said, those included Austin, San Antonio, Crpus, their electric utilities and gas utilities and tons of smaller towns and cities. They say about 4 million people got gas from Oscar Wyatt’s company.
Audrey McGlinchy His company promised them cheap gas for decades. He even promised not to raise their rates. He said he would not go to the Railroad Commission to ask for permission to do that.
Mose Buchele He didn’t have all this gas stored up, but he figured there’d always be more of it out there when he needed it.
Audrey McGlinchy By the early 70s, that had started to change.
Mose Buchele The low price for gas and those national pipelines meant that fewer companies were drilling for the stuff.
Monty Humble Because the price that FERC was allowing for interstate gas was so low that it wasn’t worth the bother.
Audrey McGlinchy That meant supply started shrinking. Now say you were buying Texas gas somewhere in the northeast. I don’t know Massachusetts. This didn’t really affect you. That’s because the price you paid was still kept down by the feds. But if you were buying Texas gas in Texas off of one of those intrastate pipelines, there was no price cap, so gas started getting way more expensive.
Mose Buchele So here’s Oscar Wyatt. He’s promised all these cities decades of cheap gas, but he never really had it. And now it was too expensive for him to buy to resell at a profit.
Audrey McGlinchy Right. Buy high. sell low is not a sustainable business plan.
Monty Humble He would have been out of business in a week.
Mose Buchele So Wyatt took a different approach. His company started cutting off its customers.
Speaker 7 This morning, the gas company said it was cutting back its deliveries by one third.
Mose Buchele Spokesman for the winter of 72-73 was brutally cold in Texas.
Audrey McGlinchy People who relied on gas heating shivered in their homes.
Monty Humble You know, if you were lucky enough to have a girlfriend, it was okay to sleep at night. But if you were by yourself, it was damn cold.
Mose Buchele And it wasn’t just gas or heating that was cut off. Texas electric utilities relied on gas to generate power without it. They scrambled to get other fuel’s fuel oil to run their power plants.
Audrey McGlinchy Convoys of tanker trucks were constantly moving between refineries and city power plants just to keep the lights on.
Mose Buchele During that first year of shortages. Cities pleaded for conservation. Businesses closed or cut back work hours.
Audrey McGlinchy UT Austin shut down for a week in January of 1973, then again in February. There just wasn’t enough energy to heat and light the campus.
Mose Buchele It was the same story everywhere Oscar Wyatt’s company operated.
Monty Humble So it was, I suppose, a foretaste of what people experienced during era. I don’t recall stories in the press about people dying from either carbon monoxide poisoning or hypothermia. I have no doubt it probably happened.
Audrey McGlinchy Wyatt’s company, Coastal States reduce gas for their customers for 65 days that year.
Mose Buchele At points, they blamed mechanical problems for the supply issues. But it soon became clear that the company was short of gas and didn’t want to buy more at a loss.
Monty Humble The press really didn’t take very long to villainize Oscar Wyatt as the originator of this problem.
Audrey McGlinchy Like we said, one of the promises Wyatt’s company made was to never raise prices.
Mose Buchele But in March of 1973, that’s exactly what the company did.
Audrey McGlinchy But first, it needed permission from the Railroad commission.
Mose Buchele The commission was the regulator for oil and gas and pipelines in the state.
Audrey McGlinchy So wyatt’s company went to commissioners saying it needed to charge more. That was the only way it could buy enough gas to supply its customers without going bankrupt.
Monty Humble And what they said was, we’re actually a public utility. And if we’re a public utility, the iron rule is that a public utility is allowed to recover its cost of service.
Mose Buchele That meant that a utility could raise its rates even though it had promised not to.
Audrey McGlinchy But going to the commission also shine some light on the business practices of coastal states Wyatt’s companies.
Mose Buchele Cities like Austin and San Antonio. I’ve been trying to get a look at what the company’s actual gas reserves were for a while, and now they saw how much gas it was actually sitting on.
Audrey McGlinchy And what they saw shocked them. The company had nowhere near as much gas and reserve as it had claimed.
Mose Buchele Angry customers accused Coastal States of engineering a gas shortage to drive prices up. They called for a federal investigation. But you know, that wasn’t going to happen. Coastal was an intrastate pipeline company. The feds had no authority.
Audrey McGlinchy And Wyatt and his company always said that they were the real victims?
Mose Buchele They tried to renegotiate rates in good faith. They said they’d just been blamed for bad federal energy policy.
Audrey McGlinchy But the cities didn’t really buy this, especially after they learned that coastal had been selling what gas it did have to other customers at the new, higher prices. It was doing this even as it reduced supply to the city customers.
Mose Buchele The outrage grew. In August, the cities went to the Railroad Commission, demanding that Wyatt’s company give them back the gas it had sold other places. Monty Humble says it reminds him of an old saying.
Monty Humble He sells what isn’t hisn and must buy it back or go to prison.
Mose Buchele The railroad Commission refused to do what the cities were asking. It said it had no authority to dig into all these different contracts to decide whose gas was whose.
Audrey McGlinchy But it did do something to get more gas in the system. It appointed a new board of directors for Coastal Gas subsidiary called Lavaca Gathering and allow the company to raise prices.
Mose Buchele The cities were not happy with that. But the commissioner said it was the only way to keep Coastal solvent, let it buy more gas for its customers. Solve the energy shortages that had been gripping Texas.
Audrey McGlinchy But then other events got in the way.
Monty Humble This is NBC Nightly News. Wednesday, October 17th. Good evening. The Middle East War produced developments all over the world today. The oil producing countries of the Arab world decided to use their oil as a political weapon.
Mose Buchele This is where the two different energy crises meet. This is where we go back to OPEC, that oil cartel modeled after the Texas Railroad Commission
Audrey McGlinchy In 1973 there’s yet another war in the Middle East. The US sides with Israel, and in protest, OPEC declares an oil embargo.
Announcer They will reduce oil production by 5% a month until the Israelis withdraw from occupied territories.
Jay Hakes When the war broke out in 73. OPEC was not an influential group.
Mose Buchele This is Jay Hakes. He worked on energy policy for the federal government starting in the 70s. And he says before 73, the U.S. had always been able to offset interruptions in oil supply by increasing domestic production.
Audrey McGlinchy We learned about this in the last episode from David Prindle. Up until this point, it had been the Texas Railroad Commission that had been managing that balance.
David Prindle They take their thumb off the spigot for a while and produce more oil.
Mose Buchele But by now, there was no backup supply left to tap. Energy scarcity had already started to take hold in the US, and the embargo made a bad situation worse. Here’s Monty Umble.
Monty Humble Suddenly, we had gone from a country that had a limitless supply of energy to a country that was beggared for energy, and we were all trying to figure out what in the hell it happened to our world.
Richard Nixon When I spoke to you earlier, I indicated that the sudden cutoff of oil from the Middle East had turned into serious energy shortages. We expected this winter into a major energy crisis.
Audrey McGlinchy With no way to immediately increase supply. Richard Nixon’s administration tried all sorts of things to reduce demand.
Richard Nixon President Nixon urged the American people to drive 50mph, and even before it became a law, people started to do it.
Mose Buchele Yes, it was a law. You could not drive fast on U.S. highways. But no, not everybody was doing it.
woman Are you well on the slow? Down to 50 miles an hour?
woman 2 No. Why not? Because it’s stupid, you know, and I’ve missed a lot. The government started divvying up oil reserves between different industries.
Jay Hakes Farmers wanted to be guaranteed that they could get diesel fuel.
Mose Buchele Nixon literally Grinched out, told people not to put up Christmas lights to save power.
Richard Nixon And in a way, I suppose one could say with only one light on the tree. This will be a very, very Christmas.
Audrey McGlinchy They asked gas stations to close on Sundays.
Mose Buchele In 1974, the government bent the course of time to its will, declaring a year round daylight savings time. They thought it would save energy.
Audrey McGlinchy But it didn’t.
Jay Hakes Work. They called the fog of war, you know, in the military. And I think some of that happens in the middle of the energy crisis.
Audrey McGlinchy Hakes thinks some of these measures maybe even made things worse. Shortages hit gas stations. This is when you start hearing about those long lines.
Mose Buchele People getting in fistfights over gasoline. In fact, the price of gasoline went up so fast. Gas stations needed to replace their pumps.
accouncer A gas pump distributor, w e Crowder, explains the problem.
W E Crowder Well, we never thought the gasoline would go over $0.50 a gallon. And the most you can post on this is 49 and 9/10 cents per gallon.
Audrey McGlinchy All this stuff happening with oil had a big effect on natural gas.
Announcer We’re in an energy crisis now and will be for some time to come.
Mose Buchele With oil becoming scarce and expensive, industries across the country started using more natural gas. It was still cheaper because they still had that price cap on it. But of course, the rise in demand just made it even more scarce.
Announcer We have at present an absolute shortage of natural gas. We cannot produce as much as we can use, as we are equipped to use in our homes and our factories. This situation is destined to continue indefinitely.
Audrey McGlinchy Other parts of the country experience what cities in Texas had the year before. Schools canceled classes to save energy. Businesses went under thanks to the high cost of fuel.
Johnny Cash There’s a new pioneer spirit in America today. The spirit of conservation.
Mose Buchele Johnny Cash was going on TV telling people to use less energy.
Johnny Cash If everybody dials down six degrees at home and slows down on the highways, it’ll conserve enough fuel to provide energy for more than a million American jobs. And that’s vital to all of us.
Audrey McGlinchy Paid for by an oil company.
Johnny Cash Amoco Oil is doing all they can to get more energy to us.
Mose Buchele But part of these shortages, especially in the northeast, were not actually because of low supply. They were because of the low price of natural gas that we talked about on those big national pipelines.
Jay Hakes Because the price had been set so low that it really wasn’t profit making.
Audrey McGlinchy So instead of sending gas, other states, gas producers and suppliers just sold their gas in Texas where they could get more money for it.
Mose Buchele Monty Humble says for years, the low prices a great deal for gas consuming states. Most of the country wanted to keep prices low.
Jay Hakes All well and good until the energy crisis hit. And FERC went. Oh, shit. We’ve got to raise the price of interstate gas, or else we’re going to freeze.
Audrey McGlinchy The feds push prices up dramatically in 1974. The idea was to lure gas producers back into the national system.
Jay Hakes Well, when that happened, it sucked the gas out of Texas that had been trapped here because of the low interstate price.
Mose Buchele That spelled even more trouble for Oscar Wyatt’s gas company, his customers, and the agency in charge of it all. That’s coming up after the break. For most of this season. We’ve talked about how the Texas Railroad Commission refereed conflicts within the oil and gas industry.
Audrey McGlinchy These were difficult, sometimes dangerous fights that the regulators jumped into for the benefit of industry and the Texas economy.
Mose Buchele Railroad commissioners made no secret that they were supporters of industry in the mid 60s. One commissioner even described the agency as industry’s representative in the state government, almost like a public funded lobbyist for oil and gas.
Audrey McGlinchy But in the mid 1970s, with cities outraged at the conduct of their gas supplier. The commission was asked to get between industry and everyday people.
Mose Buchele For a lot of those people. 1974 was the first time they learned about the Railroad Commission.
Audrey McGlinchy When their gas got cut off, they learned the Railroad Commission was in charge of the pipelines.
Mose Buchele When prices went up, they learned it was the commission that signed off on their higher bills.
Audrey McGlinchy And while paying more money for less energy, many of them came to the conclusion that the game was rigged.
Mose Buchele Austin and other cities had been asking the commission to intercede on their behalf to review the gas company’s contracts with other customers, maybe even revoke them if they weren’t in the public interest.
Audrey McGlinchy And the Railroad Commission said it simply did not have that authority.
Mose Buchele So the cities sued the Commission. They said they had to sue to force the regulators to regulate, and the lower courts told the commission it did have the authority.
Audrey McGlinchy Rather than comply, the agency appealed to the state Supreme Court.
Mose Buchele While all this went on, the whole country was in the grips of the energy crisis. Gas bills kept going up and gas shutoffs continued.
Audrey McGlinchy And people were pissed.
Woman Announcer There was a 1974. Version of the. Boston Tea Party at San Antonio. Today.
Audrey McGlinchy A group stormed the San Antonio City Council, dumping tea bags on the council members in protest of high bills.
Mose Buchele A thousand people stormed an event Oscar Wyatt attended, waving skull and crossbones flags and hurling abuse.
Audrey McGlinchy Protesters march on the governor’s mansion.
Mose Buchele People were angry at everyone.
Audrey McGlinchy But the Railroad Commission, which had operated for years within this industry, was uniquely unequipped to handle the public attention.
Jerry Quijano It’s plain that the Railroad Commission majority sees the commission as an arm of the oil and gas industry, said an editorial in the Houston Chronicle.
Audrey McGlinchy State Representative Gonzalo Barrientos said the railroad commission was, quote, “the best friend utilities ever had as far as rate increases are concerned.”
Mose Buchele People started calling for a new statewide commission to regulate all utilities.
Audrey McGlinchy By this time, Texas was the only state in the country without a public utility commission. Anger over gas and electric bills, plus.
Mose Buchele A big controversy over the phone company.
Audrey McGlinchy Had a lot of people saying a commission was long overdue.
Mose Buchele The man who ended up accomplishing that.
Audrey McGlinchy Lyndon Olson, the man we met at the beginning of this episode.
Mose Buchele The man who was told to rise above his principles.
Lyndon Olsen That’s interesting. I’ve never been asked about this in 50 years.
Mose Buchele Here’s how it went down. Olson filed a bill on utility oversight in 1975.
Audrey McGlinchy This was two years after that run in. He had with Senator Bill Moore the bull of the Brazos. Still, Olson wasn’t even 30 years old.
Lyndon Olsen I just may have been too young to naive to know what I was getting into, he says.
Mose Buchele Unlike some other lawmakers he didn’t actually like the idea of a big central agency to oversee utilities in the state.
Lyndon Olsen I have always been a strong supporter of local governments. It’s kind of a conservative philosophy.
Mose Buchele And at this point, regulation of public utilities was done almost entirely at the local level. Cities and towns in Texas each regulated the companies that serve their residents.
Audrey McGlinchy So Olson wrote a bill that increased local power over those utilities.
Lyndon Olsen I mean, in those days, we called it the electric company phone company, the gas. Company.
Mose Buchele But his legislation was not going to get far.
Audrey McGlinchy Olson says almost immediately, the bill he wrote was replaced, substituted out by House leadership.
Committee member Mr. Baker and members Committee amendment number one is a complete substitute, offered in the form of an amendment to House Bill 819.
Audrey McGlinchy This is not completely uncommon, but for him it was disheartening.
Lyndon Olsen You know, I was advocating for local government. I’d drop a bill in. First thing I learned was that they were going to amend my bill and take it away from me. The original bill I introduced with a complete committee substitute.
Mose Buchele This new bill called for creating a Texas Public Utility Commission.
Audrey McGlinchy Like we said, it was an agency that a lot of consumer advocates and politicians had demanded. Even before the energy crisis hit.
Mose Buchele And Olson says the big utilities seem to kind of like the idea, too.
Lyndon Olsen I had one of the CEO of one of the utilities say to me, as much as we don’t want this kind of concentration of power, there are times we’d rather have one gorilla then a thousand monkeys dragging their knuckles down while stuck with me.
Mose Buchele So Olson considered his situation. He was officially the author of a bill he did not write. It included a proposed state agency. He was, at the very least skeptical of. But his position did afford him some leverage.
Lyndon Olsen Because at that time there was essentially a rule that the author of the bill that goes to conference chairs the conference committee.
Audrey McGlinchy Maybe this was a chance to rise above his principles as chair of the committee overseeing the bill. He could still have a say in the creation of this new commission, maybe still do some good as he saw it.
Lyndon Olsen But the definition of a rate basing it the whole can territorial integrity, co-ops, how we regulate utilities.
Mose Buchele So he worked on the new substituted bill. It created a system to oversee revenues for phone companies, water companies, electric companies, gas companies based on their cost of doing business, basically regulate prices so that these monopoly utilities don’t fleece their customers.
Audrey McGlinchy And that’s when he got a call from the state Senate. The Senate had been debating its own utility commission bills. Any legislation would ultimately need to pass through a committee chaired by none other than State Senator Bill Moore.
Mose Buchele The bull of the Brazos.
Lyndon Olsen So I go over to the Senate, sit down with 3 or 4 of the senators, the ones that would be the big, you know, the old Bulls with that.
Mose Buchele And they start talking about his public utility bill.
Lyndon Olsen And then you said, we’re going to vote for anything else since this as long as natural gas is not it.
Mose Buchele Gas utilities stay at the Railroad Commission.
Lyndon Olsen And say, well, okay.
Mose Buchele Yeah. But why I like why exclude gas from this new commission?
Lyndon Olsen I gotta tell you, there’s nothing pretty about what I’m fixing to tell you. It was just the fact that the gas boys didn’t want to be screwed with. They did not want to be regulated by this entity that they thought they might not be able to work with, Control have used since the inception of this foundation of regulatory mechanism natural gas for oil and gas.
Mose Buchele He says one thing the oil and gas lobby liked was the name.
Lyndon Olsen We call it the Railroad Commission. I mean, to this very day, it’s still called the Railroad Commission. And 99% of the people that you talk to. What do you think about the Railroad Commission? Unless you’re fairly thoughtful, learn it and pay attention — have no clue. The wholesale gas industry is regulated by the railroad, which they’re not. Right. Just what it’s called.
Audrey McGlinchy Olson still thinks he probably made the right call. After all, the bill created a system to regulate utility profits. Even if gas utilities stayed under the railroad commission. He did what he could to shape the policy.
Lyndon Olsen It was a damnedest political fight I ever got involved in.
Mose Buchele And it made Texas the only state in the country that has two different utility regulators, one for gas companies. One for every other utility.
Audrey McGlinchy And Monte Humble says the way Texas regulates different types of energy, electricity and gas creates big problems.
Mose Buchele You have two different agencies.
Monty Humble With different regulated industries and different constituencies.
Audrey McGlinchy Chosen in two different ways.
Monty Humble One regulator whose commissioners are elected statewide and another whose board members are appointed by the governor.
Mose Buchele But the things they regulate oil and gas on one side and electricity on the other. They need each other. You can’t have one without the other. Separate regulation leads to very real conflicts.
Monty Humble That become very apparent in times when the system is put under stress.
Audrey McGlinchy Like, say, a huge winter storm.
Mose Buchele Stay tuned. For the cities that wanted to see gas more heavily regulated by the state. This decision about the Public Utility Commission was the second big disappointment of the year. A couple of months earlier, the Texas Supreme Court ruled against them in their legal fight with the Railroad Commission.
Audrey McGlinchy The court said the railroad Commission did not have the authority over gas contracts.
Mose Buchele It wasn’t up to the Railroad commission to decide whether the city’s supplies had been sold out from under them, who was owed, what money and what gas would have to be decided through years of litigation.
Audrey McGlinchy And it was.
Mose Buchele City’s sued the gas company. The gas company sued the railroad commission.
Audrey McGlinchy At times, the state supreme court pressured the commission.
Mose Buchele Coastal states pressured its customers to a.
Announcer Utility firm as threatened to cut off natural gas deliveries for Austin and San.
Mose Buchele Antonio once it even cut gas off from a Texas town, Crystal city, to get back payments on bills.
Audrey McGlinchy Finally, everyone came to a settlement in the late 1970s.
Mose Buchele The agreement spun the gas utility part of coastal states off into a different company, Lavaca Gathering became Valero.
Audrey McGlinchy In the years after there was national energy deregulation,
Mose Buchele There were booms and busts in the Texas oil field.
Audrey McGlinchy But the Railroad Commission never regained its former position of global power.
Mose Buchele In 1988. Kent Hance, who you’ve heard in earlier episodes, served during one of those tough times in the Texas oil industry.
Kent Hance When I got appointed, the industry was at the bottom of the barrel, so they were barely they were struggling to get by.
Audrey McGlinchy And it wasn’t just oil and gas. The entire state economy was tanking out.
Kent Hance They had a lot of see-through buildings. There were buildings that were built, but you could see through them. They were not finished inside.
Mose Buchele In Texas, a lot of this went back to the low price of fossil fuels. So Hance, as one of the top oil and gas regulators, decided he’d go to the guys who set that price.
Kent Hance And that’s how I started going to OPEC meetings.
Audrey McGlinchy A Texas railroad commissioner sitting down with the international cartel that took his commission’s power.
Kent Hance I felt like, look, if I’m a carrot farmer and there’s somebody setting the price carrots, I want to know them. I want to know them. I want to know something about people in oil and gas industry that setting the price. And that was OPEC.
Mose Buchele Hanson’s got a ton of fascinating stories about dealing with the people who ran the global oil industry. For this story has to do with another big name in energy.
Kent Hance I was in Vienna.
Audrey McGlinchy That’s where OPEC headquarters are in.
Kent Hance So I’m reading the paper and I looked on the front page and there was a picture and it was J.R. Ewing.
Mose Buchele You know, your 80s TV. You’ve probably heard of Dallas, a long running drama about the life and times of a Texas oil dynasty. J.R. Ewing was one of the show’s most famous characters, a conniving, alcoholic oil baron.
Audrey McGlinchy He was played by the actor Larry Hagman, who, it turns out Hance knew, and who, it turned out, was also in Vienna, starring in a stage play.
Kent Hance We called the theater and I said, I’d like for you to see the OPEC people, OPEC ministers.
Mose Buchele Hagman said, sure. That’s how the fictional Texas oilman J.R. Ewing ended up hobnobbing with the real life power elite of global oil.
Kent Hance But all they stood in line long time to get their picture made with J.R.. They they liked it.
Mose Buchele It. Did he act the part like, do you.
Kent Hance Have a cowboy hat? Any cowboy hat on? And he he played the part and talked to him about the oil and gas industry. And the headline the next day in that article said OPEC meets J.R.. I mean, it was hilarious.
Mose Buchele Hilarious, sure, but also kind of a stark illustration of how far the railroad commission had fallen. Texas had the swagger, it had the history. But by this time it just didn’t have the juice. In. This episode of The Disconnect was reported by me most bombshell. It was produced by Audrey McGlinchey, Matt Largey and myself. We had technical support from Jake Pearlman and Renee Chavez. Thanks to Jimmy Moss, Jerry Quijano and Becky Fogel for their voice acting. Jimmy and Becky read real scripts from news broadcasts about coastal states in the 70s. Oh my.
Becku Fogel God. Shout out to the Boston Tea Party!
Mose Buchele We are in a membership drive right now. If you want more of these kinds of podcasts, become a member today. Go to supportthispodcast.org. The disconnect is a production of Cut and Cut Studios in Austin. I’m Mose Buchele. Thanks for listening.
This transcript was transcribed by AI, and lightly edited by a human. Accuracy may vary. This text may be revised in the future.
