Tomorrow, the Organization of Petroleum Exporting Countries (OPEC) meets in Vienna to try to figure out a way to cut oil production. For decades OPEC’s set oil prices by controlling supply. So the meeting will be closely watched because it could lead to higher oil prices.
But, the idea to manipulate oil prices by setting limits on oil, didn’t start with OPEC. It started right here in Texas.
During the oil boom of the 1930s, large oil producers were worried that independent drillers were over-supplying the market. To control production and stabilize prices the Railroad Commission issued “pro-ration” orders to limit production from each oil well.
When independent oilmen in the East Texas field refused, the governor of Texas went so far as to declare martial law and send in troops. Some said oil prices would rise “as the point of a bayonet.”