Texas Oil & Gas Industry Sings 'Blues' After Election

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Written by Paul Wiseman for IIR News Intelligence (Sugar Land, Texas)

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Summary

With Texas state government turning mostly blue for the first time in more than 20 years, the oil and gas industry braces for what's ahead.

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Changing the Guard

November 3, 2026, was a historic date for Texas politics. For the first time since Ann Richards left office in 1995, the state will have a Democratic governor--and the party will hold all other statewide offices, along with a majority in the state's house of representatives.

Only in the senate do Republicans still hold sway, a status that the state's oil industry hopes will mitigate Democrats' plans to more heavily regulate and tax oil and gas operations. Republicans also still have a majority in the state's oil and gas regulatory agency, the Texas Railroad Commission--but even that is a slimmer margin.

Republican Bo French lost to Democrat Jon Rosenthal. The campaign was marked by French's racially insensitive remarks and social media posts, leading to his being disavowed by many in his own party.

Industrial Info Resources is tracking activity at 1,376 oil and gas production facilities in Texas. Industrial Info Resources offers more information on these developments in its Global Market Intelligence (GMI) Oil & Gas Production Plant Database, where readers can find details--including construction schedules, investment values and necessary equipment--in a list of plant profiles.

Red Years Helped Boost Black Gold

Republican governors, attorneys general and Railroad Commission members since the early 2000s have overseen and boosted oil's dramatic turnaround in the shale revolution. Texas's oil production had been declining from 1971 until 2008, when the growth of hydraulic fracturing in tight shale formations released a flood of previously unavailable oil.

That technology was assisted by oil prices rebounding from 20 years of sub-$20-per-barrel oil. The average in 1998 was $12.72 per barrel. In July 2008, prices briefly peaked at nearly $150 per barrel, before dropping back well below $100.

During that time oil-friendly Republican leadership was reluctant to regulate or tax the industry, leaving most regulation to the Democrat-controlled White House's EPA. Revenue from the industry is significant. Adding production taxes from oil and gas together, the industry accounted for $7.9 billion per year in 2025, about 9.3% of the state's total income of $84.2 billion. That's according to a state government document called "A Field Guide to the Taxes of Texas," issued in December of 2025.

Future 'Blues'

Governor-elect Gina Hinojosa has spoken about oil and gas mostly in generalities, but what she has said has been concerning to the industry.

Hinojosa has said that in 2021's Winter Storm Uri, gas companies purposely withheld supplies to drive profits--and that gas bills rose by an average of $40 per month afterward. She has called for a rate freeze on both natural gas and electric rates.

Hinojosa has proposed a one-time, $1,500 rebate to every Texan, with that money to come from the Economic Stabilization Fund (ESF), which is funded primarily by oil and gas taxes. She calls that a "corruption tax refund," contending that outgoing Gov. Greg Abbott has hoarded Texans' money and enriched billionaires with state contracts and tax breaks, leaving others to struggle with rising living costs.

A refund would require a two-thirds majority vote of the state legislature, which might be a stretch since the Democrats don't control the senate. Democrats also have only an 84-66 majority in the house, leaving them 16 votes short of two-thirds.

The ESF, also called the "rainy day fund," was started in 1988. It currently holds about $25 billion, and the proposed refund would cost about $17 billion, Hinojosa's campaign said before the election.

Regulatory Changes

The bigger concern could come from regulation. In 2021 and 2023, Hinojosa helped to sponsor legislation that would have taxed the flaring of gas and required gas to be captured, among other methane-reduction measures.

Still, significant action will be hard to come by. The Texas Railroad Commission is still two-to-one Republican, and the party still controls the senate. Both parties will need to make tradeoffs and find ways to compromise for legislation of any sort to move forward and be signed by the new governor.

So, the biggest issue for Texas may involve gridlock, instead of radical tax or regulatory changes.

Key Takeaways

• Democrats surged in statewide races across Texas on Election Day.
• However, Republicans still control the state senate and enjoy a majority on the Texas Railroad Commission.
• Both parties likely will have to compromise to get any legislation passed in the next two years.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news, and analysis on the industrial process, manufacturing, and energy-related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified, and verified plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).