The Gusher Age
Texas Oil Boom, sometimes called the Gusher Age, was a period of dramatic change and economic growth in the U.S. state of Texas during the early 20th century that began with the discovery of a large petroleum reserve near Beaumont, Texas. The find was unprecedented in its size and ushered in an age of rapid regional development and industrialization that has few parallels in U.S. history. Texas quickly became one of the leading oil producing states in the U.S., along with Oklahoma and California; soon the nation overtook the Russian Empire as the top producer of petroleum. By 1940 Texas had come to dominate U.S. production. Some historians even define the beginning of the world's Oil Age as the beginning of this era in Texas. The major petroleum strikes that began the rapid growth in petroleum exploration and speculation occurred in Southeast Texas, but soon reserves were found across Texas and wells were constructed in North Texas, East Texas, and the Permian Basin in West Texas. Although limited reserves of oil had been struck during the 19th century, the strike at Spindletop near Beaumont in 1901 gained national attention, spurring exploration and development that continued through the 1920s and beyond. Spindletop and the Joiner strike in East Texas, at the outset of the Great Depression, were the key strikes that launched this era of change in the state. This period had a transformative effect on Texas. At the turn of the century, the state was predominantly rural with no large cities. By the end of World War II, the state was heavily industrialized, and the populations of Texas cities had broken into the top 20 nationally. The city of Houston was among the greatest beneficiaries of the boom, and the Houston area became home to the largest concentration of refineries and petrochemical plants in the world. The city grew from a small commercial center in 1900 to one of the largest cities in the United States during the decades following the era. This period, however, changed all of Texas' commercial centers and developed the Beaumont/Port Arthur area, where the boom began. ("Texas Oil")
Early History of Petroleum
The "Lucas Gusher" Oil Well
(Lucas Gusher )
In the 1850s, the process to distill kerosene from petroleum was invented by Abraham Gesner. The demand for the petroleum as a fuel for lighting around the world quickly grew. Petroleum exploration developed in many parts of the world with the Russian Empire, particularly the Branobel company in Azerbaijan, taking the lead in production by the end of the 19th
century.
In 1859, Edwin Drake of Pennsylvania invented a drilling process to extract oil from deep within the earth. Drake's invention is credited with giving birth to the oil industry in the U.S. The first oil refiner in the United States opened in 1861 in Western Pennsylvania, during the Pennsylvanian oil rush. Standard Oil, which had been founded by John D. Rockefeller in Ohio, became a multi-state trust and came to dominate the young petroleum industry in the U.S.
Texans knew of the oil that lay beneath the ground in the state for decades, but this was often seen more as a problem than a benefit because it hindered the digging of water wells. Rancher W. T. Waggoner, who later became an influential oil businessman, struck oil while drilling for water in 1902, and was quoted as saying "I wanted water, and they got me oil. I tell you I was mad, mad clean through. We needed water for ourselves and for our cattle to drink."
Despite the negative associations with oil among many ranchers and farmers, demand for kerosene and other petroleum derivatives drove oil prospecting in Texas after the American Civil War at known oil-producing springs and accidental finds while drilling for water. One of the first significant wells in Texas was developed near the town of Oil Springs, near Nacogdoches. The site began production in 1866. The first oilfield in Texas with a substantial economic impact was developed in 1894 near Corsicana. In 1898, the field built the state's first modern refinery. The success of the Corsicana field and increasing demand for oil worldwide led to more exploration around the state. ("Oil and Gas Division")
century.
In 1859, Edwin Drake of Pennsylvania invented a drilling process to extract oil from deep within the earth. Drake's invention is credited with giving birth to the oil industry in the U.S. The first oil refiner in the United States opened in 1861 in Western Pennsylvania, during the Pennsylvanian oil rush. Standard Oil, which had been founded by John D. Rockefeller in Ohio, became a multi-state trust and came to dominate the young petroleum industry in the U.S.
Texans knew of the oil that lay beneath the ground in the state for decades, but this was often seen more as a problem than a benefit because it hindered the digging of water wells. Rancher W. T. Waggoner, who later became an influential oil businessman, struck oil while drilling for water in 1902, and was quoted as saying "I wanted water, and they got me oil. I tell you I was mad, mad clean through. We needed water for ourselves and for our cattle to drink."
Despite the negative associations with oil among many ranchers and farmers, demand for kerosene and other petroleum derivatives drove oil prospecting in Texas after the American Civil War at known oil-producing springs and accidental finds while drilling for water. One of the first significant wells in Texas was developed near the town of Oil Springs, near Nacogdoches. The site began production in 1866. The first oilfield in Texas with a substantial economic impact was developed in 1894 near Corsicana. In 1898, the field built the state's first modern refinery. The success of the Corsicana field and increasing demand for oil worldwide led to more exploration around the state. ("Oil and Gas Division")
Oil Progression in Texas
Oil Field, Corsicana, Texas (Williams)
There are several events in the 19th century that have been treated as a beginning for oil-related growth in Texas, one of the earliest being the opening of the Corsicana oil field in 1894. The Spindletop strike of 1901, at the time the world's most productive petroleum well ever found, is considered by most historians as the beginning point. This single discovery began a rapid pattern of change in Texas and brought worldwide attention to the state.
Oil Field Scene near Corsicana, Texas in early 1920's. There are 700 producing wells in Navarro county. They are mostly shallow wells, many of them have been producing for 40 years. The county produces 600,000 barrels annually. The first Commercial oil well west of the Mississippi was drilled in Corsicana, Texas in 1894. ("NavarroCounty TXGenWeb" )
By the 1940s, the Texas Railroad Commission, which had been given regulatory control of the Texas oil industry, managed to stabilize American oil production and eliminate most of the wild price swings that were common during the earlier years of the boom. Many small towns, such as Wortham, which had become boomtowns during the 1920s saw their booms end in the late 1920s and early 1930s as their local economies collapsed, resulting from their dependence on relatively limited petroleum reservoirs. As production peaked in some of these smaller fields and the Great Depression lowered demand, investors fled. In the major refining and manufacturing centers such as Beaumont, Houston, and Dallas, the boom continued to varying degrees until the end of World War II. By the end of the war, the economies of the major urban areas of the state had matured. Though Texas continued to prosper and grow, the extreme growth patterns and dramatic socioeconomic changes of the earlier years largely subsided as the cities settled into more sustainable patterns of growth. Localized booms in West Texas and other areas, however, continued to transform some small communities during the post-war period. ("Texas Oil")
Oil Field Scene near Corsicana, Texas in early 1920's. There are 700 producing wells in Navarro county. They are mostly shallow wells, many of them have been producing for 40 years. The county produces 600,000 barrels annually. The first Commercial oil well west of the Mississippi was drilled in Corsicana, Texas in 1894. ("NavarroCounty TXGenWeb" )
By the 1940s, the Texas Railroad Commission, which had been given regulatory control of the Texas oil industry, managed to stabilize American oil production and eliminate most of the wild price swings that were common during the earlier years of the boom. Many small towns, such as Wortham, which had become boomtowns during the 1920s saw their booms end in the late 1920s and early 1930s as their local economies collapsed, resulting from their dependence on relatively limited petroleum reservoirs. As production peaked in some of these smaller fields and the Great Depression lowered demand, investors fled. In the major refining and manufacturing centers such as Beaumont, Houston, and Dallas, the boom continued to varying degrees until the end of World War II. By the end of the war, the economies of the major urban areas of the state had matured. Though Texas continued to prosper and grow, the extreme growth patterns and dramatic socioeconomic changes of the earlier years largely subsided as the cities settled into more sustainable patterns of growth. Localized booms in West Texas and other areas, however, continued to transform some small communities during the post-war period. ("Texas Oil")
A Growing Demand for Oil
A Benz Motorwagen, ca. 1888 (The Benz Patent Motorwagen)
In 1879, Karl Benz was granted the first patent on a reliable gasoline-powered engine in Germany. In 1885, he produced the first true gasoline car, the Benz Patent Motorwagen. The new invention was quickly refined and gained popularity in Germany and France, and interest grew in the United Kingdom and the United States. In 1902, Ransom Olds created the production line concept for mass-producing lower-cost cars. Henry Ford soon refined the concept so that by 1914, middle-class laborers could afford automobiles built by Ford Motor Company. Car production exploded in the U.S. and in other nations during the 1920s. This, and the increasing use of petroleum derivatives to power factories and industrial equipment, substantially increased worldwide demand for oil. ("Texas Oil")
Spindletop
Anthony Francis Lucas (Peipert )
After years of failed attempts to extract oil from the salt domes near Beaumont, a small enterprise known as the Gladys City Oil, Gas, and Manufacturing Company was joined in 1899 by Croatian/Austrian mechanicalengineer Anthony F. Lucas, an expert in salt domes. Lucas joined the company in response to the numerous ads the company’s founder Pattillo Higgins placed in industrial magazines and trade journals. Lucas and his colleagues struggled for two years to find oil at a location known as Spindletop Hill before making a strike in 1901. The new well produced approximately 100,000 barrels of oil per day, an unprecedented level of production at the time.The 1902 total annual production at Spindletop exceeded 17 million barrels. The state's total production in 1900 had been only 836,000 barrels. The overabundance of supply led oil prices in the U.S. to drop to a record low of 3 cents per barrel, less than the price of water in some areas Beaumont almost instantly became a boomtown with investors from around the state and the nation participating in land speculation. Investment in Texas speculation in 1901 reached approximately $235 million US (approximately $6.56 billion in present day terms).The level of oil speculation in Pennsylvania and other areas of the United States was quickly surpassed by the speculation in Texas. The Lucas gusher itself was short-lived; production fell to 10,000 barrels per day by 1904. The strike, however, was only the beginning of a much larger trend. ("Oil & Gas Industry")
The Effect of Oil on Texas Economy
The Hamill brother and Spindletop (Drilling crew)
At the start of the 20th century, agriculture, timber, and ranching were the leading economic engines of Texas. This was changed by the boom, which led to rapid industrialization. Though refineries were initially concentrated around the Beaumont and Houston areas, refining operations gradually grew throughout the state by the end of the 1920s. By 1940, the value of petroleum and natural gas produced in Texas exceeded the value of all agricultural products in the state.
The opening of Houston Ship Channel in 1914 led to the Port of Houston overtaking the Port of Galveston as the state's dominant seaport. The situation led Houston to also overtake Galveston as the primary shipping center for cotton. The large quantities of oil and gas moving through Houston, Baytown, Texas City, and surrounding communities made the area around the ship channel attractive for industrial development. Chemical plants, steel factories, cement plants, automobile manufacturing, and many other types on heavy industry that could benefit from a ready supply of cheap fuel rapidly developed in the area. By the 1930s, Houston had emerged as the state's dominant economic center, though it continued to compete with Dallas throughout the 1900s. The effects of the boom helped offset the effects of the Depression so much that Houston was called the "city the Depression forgot." Dallas and other Texas communities were also able to weather the Depression better than many American cities because of oil.
The boom in the oil industry also helped promote other industries in other areas of the state. Lumber production thrived as demand climbed for construction of railroads, refineries, and oil derricks, and, in 1907, Texas was the third largest lumber producer in the United States. Growing cities required many new homes and buildings, thus benefiting the construction industry. Oil and Gas jobs were available in abundance. Agriculture and ranching grew stronger as the rapidly expanding population created more demand for their produce. ("Texas Oil")
The opening of Houston Ship Channel in 1914 led to the Port of Houston overtaking the Port of Galveston as the state's dominant seaport. The situation led Houston to also overtake Galveston as the primary shipping center for cotton. The large quantities of oil and gas moving through Houston, Baytown, Texas City, and surrounding communities made the area around the ship channel attractive for industrial development. Chemical plants, steel factories, cement plants, automobile manufacturing, and many other types on heavy industry that could benefit from a ready supply of cheap fuel rapidly developed in the area. By the 1930s, Houston had emerged as the state's dominant economic center, though it continued to compete with Dallas throughout the 1900s. The effects of the boom helped offset the effects of the Depression so much that Houston was called the "city the Depression forgot." Dallas and other Texas communities were also able to weather the Depression better than many American cities because of oil.
The boom in the oil industry also helped promote other industries in other areas of the state. Lumber production thrived as demand climbed for construction of railroads, refineries, and oil derricks, and, in 1907, Texas was the third largest lumber producer in the United States. Growing cities required many new homes and buildings, thus benefiting the construction industry. Oil and Gas jobs were available in abundance. Agriculture and ranching grew stronger as the rapidly expanding population created more demand for their produce. ("Texas Oil")
State
Oil Production Tax in 1905
Texas Capital Austin Texas (Austin, Texas)
One of the most significant developments in Texan government resulted from the creation of a state oil production tax in 1905. The revenue generated by the tax made funds available for development in the state without the need for income taxes and similar revenue mechanisms adopted in other states. In 1919, tax revenue from oil production surpassed $1 million dollars ($13.4 million in today's terms) and in 1929 it reached $6 million ($81.2 million in today's terms). By 1940, the oil and gas industry accounted for approximately half of all taxes paid in the state.
Politics in Texas during the early 1900s was defined by a spirit of Progressivism. Oil money funded the expansion of the highway system and the educational system. In general, however, the attitude toward business was laissez-faire. There were few regulations on issues such as minimum wages and child labor.
The permissive attitude toward business did not always extend toward large corporations. A lack of venture capital in the state became a significant problem with the early industry. Civic and business leaders, and even ordinary citizens, worried that the influx of capital from outside the state would lead to a loss of political power, revenue, and business opportunities. This sentiment led to a series of antitrust lawsuits by the state Attorney General starting in 1906. The lawsuits easily succeeded and limited the ability of outside investors, most notably Standard Oil, to gain control of the state oil companies.
The mistrust of Standard Oil was partially the result of a suspicion toward carpetbaggers, which ironically was also the source of skepticism regarding labor unions. Union organizers were frequently seen as attempting to support a Northern agenda of promoting opportunities for African Americans at the expense of the white population. Because of the situation this created, labor reform was slow to develop. Despite the anti-union sentiments, groups like the International Oil Workers Union attracted membership and held some influence in the industry and state government. ("Texas Oil")
Politics in Texas during the early 1900s was defined by a spirit of Progressivism. Oil money funded the expansion of the highway system and the educational system. In general, however, the attitude toward business was laissez-faire. There were few regulations on issues such as minimum wages and child labor.
The permissive attitude toward business did not always extend toward large corporations. A lack of venture capital in the state became a significant problem with the early industry. Civic and business leaders, and even ordinary citizens, worried that the influx of capital from outside the state would lead to a loss of political power, revenue, and business opportunities. This sentiment led to a series of antitrust lawsuits by the state Attorney General starting in 1906. The lawsuits easily succeeded and limited the ability of outside investors, most notably Standard Oil, to gain control of the state oil companies.
The mistrust of Standard Oil was partially the result of a suspicion toward carpetbaggers, which ironically was also the source of skepticism regarding labor unions. Union organizers were frequently seen as attempting to support a Northern agenda of promoting opportunities for African Americans at the expense of the white population. Because of the situation this created, labor reform was slow to develop. Despite the anti-union sentiments, groups like the International Oil Workers Union attracted membership and held some influence in the industry and state government. ("Texas Oil")
Texas gold rush
Texas the Gold Rush Age (The Geographic Distribution of Oil Wealth in Texas)
The gold rush days of the oil and gas industry in Texas are history. The famous East Texas fields are depleted and the state's reserves have dwindled with more than a century of drilling and pumping. But even the industry crash of the 1980s did not end the state's love affair with black gold. New drilling in west Texas and elsewhere, development of existing and newly discovered gas deposits, and technological advances have spurred new or renewed exploration, development, and production.
Texas today is the largest oil and gas producer among the states. In 2003, the state produced 364 million barrels of oil (19.4% of the U.S. total) and 5,166 billion cubic feet of natural gas (26.6%). As of 2003, Texas also contained larger shares of U.S. reserves than any other state: 4,583 million barrels of oil (20.9%) and 45,730 billion cubic feet of gas (24.2%). The state's refineries in turn produced more than a quarter of the nation's total petrochemical and fuel supply as of 2004. ("The Gold Rush Days")
Texas today is the largest oil and gas producer among the states. In 2003, the state produced 364 million barrels of oil (19.4% of the U.S. total) and 5,166 billion cubic feet of natural gas (26.6%). As of 2003, Texas also contained larger shares of U.S. reserves than any other state: 4,583 million barrels of oil (20.9%) and 45,730 billion cubic feet of gas (24.2%). The state's refineries in turn produced more than a quarter of the nation's total petrochemical and fuel supply as of 2004. ("The Gold Rush Days")
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