A Father-Daughter Dynasty Looms Large in Texas Oil and Politics

Article content

(Bloomberg Markets) — In the West Texas oil capital of Midland, Tom Craddick’s name is everywhere.

The Nadine and Tom Craddick Highway helps drivers skirt the (not-very-heavy) traffic downtown. At the local hospital, physicians’ suites occupy the two-story Craddick Medical Office Building. And at Midland College, on the north side, you’ll find Craddick Hall, named for a local oil kingpin who also happens to be the longest-serving state legislator in Texas history.

Article content

There’s one place, though, where you won’t find Tom Craddick’s name: Midlanders’ front lawns.

As he seeks a 29th term in November representing this parched, pancake-flat city of 132,000, Craddick sees little need for campaigning. After more than five decades in office, the 80-year-old Republican faces no serious competition, least of all from Democrats. Since 2008 only two people have run against him in the general election. Neither got more than 35% of the vote. And while a third, Midland geologist Steven Schafersman, is challenging him this year, he’s spent only $500 since January, versus more than $42,000 for Craddick, according to state election filings.

This fall, voters across Texas will frequently encounter the Craddick name—though it won’t be Tom’s. His 54-year-old daughter, Christi Craddick, is seeking reelection to the Texas Railroad Commission, the curiously named panel that regulates the state’s oil industry—and has nothing to do with trains. If she wins in November—and there’s little reason to think she won’t—it will be for a fourth six-year term, making her the first person to reach that milestone since the 1960s. She chairs the three-person commission.

Article content

After years of glad-handing and dealmaking, the Craddick family straddles the worlds of politics, oil and wealth, accumulating energy assets worth tens of millions of dollars. Nadine Craddick, Tom’s wife and Christi’s mother, led the Midland Chamber of Commerce in the 1990s and claims to have been instrumental in persuading Southwest Airlines Co. to add a flight to Austin, saving Tom the five-hour drive when the legislature is in session.

Midland lies at the heart of the Permian Basin, a vast reservoir of crude tucked miles below arid flats and low hills covered in scrubby sagebrush. If the region, ­stretching across the western third of the Lone Star State, from the Mexican border into New Mexico, were a country, it would be the world’s second-biggest oil producer, behind only Saudi Arabia.

Here the Craddicks are like royalty, with Tom using his legislative sway to support the Railroad Commission and protect oil interests, while Christi ensures the regulator keeps the rules friendly to oil production. “As far as a father-daughter team, I think they’re probably one of the most powerful in the history of the state,” says Kent Hance, a Republican former railroad commissioner.

Article content

Article content

The Craddicks offer a stark illustration of the way the oil industry, while dominated by megalithic corporations, is also a tight circle driven by kinship and relationships. A handshake or a nod can get you as far as a 100-page contract. And in West Texas, few can match the Craddicks in that game.

As an oilman, Tom Craddick has a big footprint across the Permian. But the family built its fortune in small ways, such as collecting tiny stakes in multiple wells or selling drilling supplies. The Craddicks’ oil wealth has raised many eyebrows at nonprofit watchdogs and in the press, including Texas Monthly, an influential magazine in the state that delved into the family’s well holdings last year. In Texas, lawmakers are citizen-­legislators who typically hold other jobs. While state law requires them and other officials to disclose their business interests and avoid substantial conflicts with their public duties, it leaves room for them to hold investments and to be paid for outside work. A 2005 profile in the Texas magazine explained how Tom earned stakes in well royalties as a fee for arranging oil-field property transactions. “The art of making the deal is the thing for me,” he said.

Article content

Even the Craddicks’ harshest critics aren’t accusing them of breaking the rules. “They do a good job of flying just under the radar,” says Ryan Sitton, a former railroad commissioner who at times butted heads with Christi at the agency.

And because the Craddicks bring home millions for projects in Midland while shielding oil producers from what many in the community consider onerous regulations, few vote against Tom or Christi. The Craddicks have long insisted they’re simply working for an industry that’s core to Midland’s booming economy. Tom declined to be interviewed for this story, and Christi didn’t respond to requests for comment.

In editorials and on social media, Christi Craddick defends her work, insisting her job is to balance the needs of the industry with those of the economy and environment. In an April post on X, she said “reasonable regulation” supports growth and resilience for oil companies. “Record oil and gas production in the Permian Basin underscores Texas’ role as a global energy leader,” she wrote.

In other words, who better to regulate it than people who know it so well?

Article content

Tom Craddick got to Texas in elementary school, when his family moved down from Wisconsin. His father opened Midland’s first toy store, at the time the only one between Dallas and El Paso, Craddick told a University of Texas history center in 2005. Midland was booming as the region pumped out crude to fuel the vibrant postwar US economy. After Tom’s dad added a pharmacy called Craddick’s Drug, complete with a lunch counter serving sandwiches, sodas and shakes, he began sprinkling the family name around town as a sponsor of various youth sports teams.

In 1968, at the age of 25, Tom decided to run for the Texas Legislature—as a Republican. His father, a Democratic precinct chairman, told his son he’d never win in a state that had been controlled by Democrats since Reconstruction. But as the party drifted leftward and began to champion civil rights, Texans migrated in the opposite direction, and Craddick rode that wave into the legislature, increasing his influence and power with each successive term. In 1975 he was appointed head of the Natural Resources Committee, the first Republican to head a Texas legislative panel. Over the years he’s sponsored legislation that limited air-quality regulations, made it easier for owners of small stakes in wells to track their royalties and granted tax exemptions for companies reviving inactive oil and gas leases. He’s served on more than a dozen committees and headed 11 of them; in recent years he’s been a regular member of the Energy Resources Committee, which oversees Christi’s Railroad Commission.

Article content

In 2003, Craddick was elected speaker of the House, a job he held for six years, overseeing a legislature that passed tort reform—which reduced lawsuits and reversed sky­rocketing insurance costs—enacted what at the time was the largest property tax cut in state history and pushed through major public school funding legislation.

But in 2009 lawmakers from both parties, unhappy with Craddick’s iron-fisted rule, ousted him and chose a more moderate Republican as speaker. While such a defenestration might have spelled the end of a legislative run for most, Craddick managed to keep his home base happy and his political career thriving, with local officials crediting him with securing state funding for roads, hospitals and schools.

The Texas Legislature meets for just 20 weeks every two years, and lawmakers earn only about $20,000 annually. Craddick has long listed his occupation as mud salesman, which is no joke. “Mud” is what the oil industry calls drilling fluids, a simple but vital ingredient injected deep ­underground to control pressure and keep wells from blowing out.

Article content

Selling mud is a folksy business that’s driven by the people you know, which works hand-in-glove with the mindset of Midlanders: Locals want to deal with locals, prompting outsiders to grouse about the “Midland Mafia” that rules the trade. They say Tom, who knows a lot of people, sits at its center. Over the years he’s worked for four different mud distributors as a mega-sales rep, turning his unmatched Rolodex into a lucrative oilfield career and, in 2013, a place in Midland’s “Petroleum Hall of Fame.” In one instance a company he owns got a mud-sales contract guaranteeing a minimum of $100,000 a month.

Oil executives say doing business in the Permian often means going through Tom Craddick in one way or another. They describe an informal middleman smoothing relationships among companies. Although buying his mud isn’t required, if you want to make a deal with any of a number of key firms where he has connections, it’s never a bad idea, say the people, who asked not be named because they didn’t want to risk losing business. One former chief executive officer of a publicly traded shale company recalls seeking to swap West Texas acreage with Chevron Corp., which required an “in” at the company. The executive went to talk to Tom, who this person says smoothly steered the conversation into a sales pitch for mud. Ever since, that executive has avoided dealing with Craddick.

Article content

Another shale producer in Midland once tried to buy properties from a major oil company. Upon looking over the closing documents, this person recalls seeing Craddick had somehow been added to the paperwork, guaranteeing him a cut of the production. The executive was caught off guard and recalls scuppering the purchase because, with Craddick on board, the economics wouldn’t work.

Such clauses aren’t illegal or even unusual in Texas oil fields, where assigning royalties is a way of compensating people for helping to bring deals together. In Craddick’s case it highlights his role as an industry power player. A dive into Tom Craddick’s two-pronged business of selling mud and reaping royalties from well production reveals the breadth of his interests. The family controls several investment partnerships that hold slivers of hundreds of oil wells across West Texas, according to MineralHolders, a research house that tracks ownership of industry assets. All told, the family’s stakes have an assessed tax valuation topping $35 million, according to an analysis by Bloomberg News, though people in the industry say the true value of oil wells is usually much higher than assessments indicate. The Craddicks own interests in wells operated by dozens of shale giants that have business regulated by Christi at the Railroad Commission and affected by committees where Tom serves.

Article content

Meanwhile, documents filed in a 2014 legal dispute with a company called EnerSciences Holdings showed that Tom Craddick had more than 30 customers—a who’s who of oil and gas—for his mud.

From the air at night, the Permian can look lit up like a Christmas tree. That’s because producers are most interested in oil, and the gas that accompanies it is frequently just an afterthought. So they burn it off, or “flare” it, when there’s no pipeline on hand to send the gas to market. Environmentalists hate it. “It is catastrophic,” says Sharon Wilson, director of Oilfield Witness, a group that monitors hazardous emissions in the Permian. “The Texas side of the Permian Basin is the No. 1 greenhouse gas polluter in the world.”

It’s the Railroad Commission, also known as the RRC, that issues flaring permits. And it issues a lot of them, typically approving dozens of requests among other matters, such as permits for drilling and disposing of oilfield waste, with a single vote and almost no discussion. Since early 2021 the commission has denied or asked for more information on only about 5% of more than 12,000 permit requests, according to Oilfield Witness. “The Railroad Commission, they’re AWOL,” Wilson says. “Their biggest bragging point is they can issue a permit to drill within 24 hours.”

Article content

The Craddicks’ political sway has long concerned Commission Shift, which monitors the oil regulator. The group and other watchdogs have frequently criticized the agency, the state’s oldest regulatory body, claiming it has a laissez-faire approach to regulation and is a booster of the oil and gas industry. A spokesperson for the commission says that it strictly enforces the rules and that the flaring rate in Texas—the amount of gas flared relative to the amount produced—has dropped 50% since 2019.

Christi was elected to the commission after flooding the airwaves with ads funded by $2.7 million in campaign contributions, including more than $600,000 from her dad and substantial sums from executives at companies in which she owns stock, election filings show. “Serving on the RRC is like hitting a big oil strike,” says Brandon Rottinghaus, a political science professor at the University of Houston.

Unlike Texas legislators, commissioners are paid well—about $140,000 a year. They aren’t required to divest from energy holdings. Christi Craddick’s filings with the state’s Ethics Commission show that last year she held stock in Exxon Mobil, Chevron and Devon Energy and that she received income—as interest, dividends, royalties or rents—from natural gas producer Chesapeake Energy, pipeline giant Kinder Morgan, driller Colgate Energy and several smaller companies. The Craddicks “have outsized power,” says Virginia Palacios, Commission Shift’s executive director. “There is a relationship there that presents a possibility for them to make decisions about the same companies they have a financial interest in.”

Article content

A 2021 report by Commission Shift found only two instances of Christi recusing herself from Railroad Commission business from 2015 to 2020. It’s unclear why, but neither appeared to be due to personal financial conflicts. And Austin TV station KXAN said it found hundreds of instances of Christi voting on issues brought by companies that pay royalties or dividends to her and the family. A statement from the Railroad Commission to the station said the purpose of her votes is “to ensure the enhancement and safe operations of the Texas energy industry” and “any suggestion to the contrary is without merit, unconfirmed by her voting record, and unreflective of her integrity.” Both Craddicks told the station their royalty rights were passive interests that gave them no say in the operations of companies or exposure to their drilling costs.

One company close to Christi is Energy Transfer LP, a pipeline operator that has earned more than $23 billion over the past five years. Craddick’s filings with the Texas Ethics Commission show she’s owned an unspecified stake in the company since at least 2019, and she serves on a separate panel, a regulatory group called the Texas Energy Reliability Council, with Grant Ruckel, Energy Transfer’s vice president for government affairs. It’s not against the rules for the two to serve together, yet the close contacts and shareholdings raise ethical questions, says Dallas oil attorney Chrysta Castañeda.

Article content

Verbal deliberations at the Reliability Council aren’t subject to Texas laws requiring public notification and access to ­meetings—giving a small group of private companies direct access to regulators with no accountability, says Castañeda, a Democrat who unsuccessfully ran for a seat on the Railroad Commission in 2020. “Christi Craddick is going to advocate for the interest of oil and gas producers,” she says. “And we’re not able to know how those conversations are proceeding.”

Supporters wave off concerns about transparency or potential bias, noting that what the Craddicks do isn’t illegal. “In Texas we believe it’s best when the business owners take the onus upon themselves,” says Dustin Fawcett, the judge—i.e., top elected official—in Ector County, adjacent to Midland. Although she’s the daughter of “a very powerful man,” Fawcett says, “she’s brilliant.”

The two poles of the Midland oil business sit just blocks apart. On West Wall Street there’s the Petroleum Club. Around the corner on West Missouri Avenue, past an electronic sign that flashes the current price of oil, the number of active US drilling rigs and the message “Make Oil Great Again,” you’ll find the Bar, which is everything the Petroleum Club isn’t.

Article content

The Petroleum Club is the city’s most exclusive watering hole, with a $10,000 membership fee, Italian marble floors, wood-paneled walls and plush seats in the dining room, where a rib-eye steak can set you back $66. For generations, oil executives have hashed out deals over whiskey and beer in quiet corners such as the Derrick Room and the Wildcatters Room. The Bar, by contrast, is all oilfield kitsch and roughneck memorabilia, where tattooed, bearded oil hands drop in for a cold beer served up by bartenders sporting T-shirts emblazoned with “Drill Baby Drill.” The walls are lined with stuffed goat and deer heads and weathered signs reading “Gulf cards honored” and “Mobilgas,” with the company’s red Pegasus logo.

Tom frequented the Petroleum Club for decades, though he’s a lifelong teetotaler. He rarely visits these days, regulars say. And while most there vote for him, some members bristle at the power he wields—though no one would say that on the record. Why bother openly criticizing a man who can create trouble for your business? And despite his workingman persona, at the Bar he’s a nonentity. Several oil workers sipping beers say they don’t even know the Craddick name. “Never heard of ’em,” one says. “No idea,” another adds with a shrug.

Article content

On a recent sun-splashed morning in downtown Midland, Tom Craddick shuffles across the lobby of the new Bush Convention Center, for the annual luncheon of the local Chamber of Commerce. As he passes a bronze statue of George H.W. Bush, who raised his family in Midland, it’s clear this isn’t the hard-edged Tom of old. But while his handshake and voice are soft, Craddick still commands a room. Unlike most of the 300 or so other attendees, he doesn’t grab a fajita. Instead he does what he’s done with consummate skill for more than a half-century—­networking, chatting up anyone who asks for a few minutes of his time.

He’s not here to campaign or even to speak publicly. Rather, he’s accompanying his wife, who’s on a panel at the event. “He does the things that are in the best interest of the oil industry, but that’s what Midland is,” says former state Senator Kel Seliger, a Republican who represented West Texas for almost 20 years. “Everybody’s in the oil business in Midland. Even if you’ve got a doughnut shop, you’re in the oil business.” And business is good. The Permian is pumping out record volumes, helping sink the city’s unemployment rate to 2.4%, well below the national average of 4%—which locals attribute at least in part to Tom’s influence in the state legislature, along with Christi’s strong support for the industry at the Railroad Commission.

Article content

Although Tom hasn’t indicated any intention to step down, he’s clearly not as vigorous as in decades past. But the Texas punditocracy is keeping a close eye on Christi and her ambitions. And she hasn’t tipped her hand, either. Commissioners in the past have jumped from the panel to statewide jobs, ambassadorships and once directly to the US Senate. “I think the governor’s office is the ultimate goal,” says Fawcett, the local pol. Her tenure on the commission, her support for the state’s top industry and, not least, her name would make her a serious contender, says Mark Jones, a political science professor at Rice University in Houston. “Christi Craddick is the one that now has the power,” he says. “The Railroad Commission’s often been used as a launching pad.” —With Devon Pendleton

Wethe and Ferman cover the oil industry for Bloomberg in Houston.

Article content