WEST TEXAS (KOSA) -- Texas Railroad Commissioner Ryan Sitton says the current market features the greatest oversupply in the history of the oil and gas industry.
On Wednesday, Sitton held a webinar, sharing data on the discrepancy between oil demand and oil supply.
"The market is 21 percent oversupplied," Sitton said. "That is almost ten times the amount we've seen in the last 40 years. The most it was ever over-supplied or under-supplied was during the Middle East Oil Embargo, where it got up to six percent."
One of the hardest hit areas has been here in West Texas.
"I have had some producers tell me that they're beginning to get offers at $6 a barrel in the Permian," Sitton said. "Now that's net to the producer. That's after differentials and after transportation costs. But we're some very low prices."
Sitton said production worldwide needs to drop by about 18 million barrels per day. He added that if the current oversupply rate continues, global oil storage will be full in 72 days.
"The producers need to shut-in now. They don't need the state to tell them this," University of Houston Energy Fellow Ed Hirs said. "If I can shut-in a well today and not sell it for $6, but produce it a year from now at $40. That's a huge profit over what I'd be making now."
The Railroad Commission didn’t really present any concrete solutions to the market issues in the webinar, and experts say there may not be any.
"We're going to have to wait out the COVID-19," Hirs said. "Just the same as Boeing. Just the same as Southwest Airlines. Just the same as Coca-Cola."