As the new millennium begins, it is worth looking back over the twentieth century and considering how oil changed Texas. If cattle and cotton helped define the history of nineteenth-century Texas not only through the state's economy but also through its life, institutions, and politics, then petroleum has had as much influence in twentieth-century Texas. Texas without oil? The notion is near inconceivable. One might as easily image Los Angeles without freeways, Manhattan without skyscrapers, or Washington, D.C., without politics. Oil is central to the economic and social identity of modern Texas.
Within a half-century of the industry's birth in Texas, the state's vast petroleum reserves dwarfed those of most other producing states. In 1932, the giant East Texas field alone yielded more than the total annual production of most of the other states. Fettered by regulation, in 1940 Texas still produced twice as much oil as California, the next largest producing state and one where production was unlimited. Producing over one-third of the nation's oil in 1940, Texas dominated the price of crude oil in national and international markets. Thus, once the Texas Railroad Commission became the industry's regulatory agency, it assumed the dominant position in crude oil markets. By the end of the first half-century, the Railroad Commission's influence over crude oil prices far exceeded that exercised today by the Organization of Petroleum Exporting Counties (OPEC).
The major objective of this book is to explain how the massive growth of the petroleum industry in Texas came about. Beginning on the upper Gulf Coast, one region after another was opened to oil and gas production. Wildcatters did not succeed in finding oil in every part of the state, but that was not for lack of trying. By the end of the first half-century, which we have called "the gusher age," petroleum had been discovered and was produced in 80 percent of the counties in Texas. The hallmark of the first fifty years is the driving force of exploration and discovery, the "upstream" sector of the industry. All of the other significant aspects of the industry—the operation of business circles, the increasing importance of science and technology, the creation and expansion of refining, manufacturing, service, and supply activities—spun off of the finding and production of crude oil. Similarly, the social and political impacts all followed from the expansion of field activity, and incidental problems stemming from exploration and production were dealt with through the political and regulatory processes.
As we tell the story of oil in Texas, we have generally followed a regional approach because it would be confusing to try to describe events in all regions in a single year, or even in a single decade. It would also be misleading. Different regions experienced different developmental patterns and confronted different problems. What was true on the Gulf Coast did not pertain to North Texas or the Permian Basin. As we cover the regions, we have not tried to include every oil field or every oil town, but rather to discuss important or typical examples. Similarly, we introduce individual oilmen and firms, as industry leaders or as typical of their times and places, but have not talked about every important oilman or every significant firm. We have also provided more information about relatively neglected parts of the state, Southwest Texas, for example, to add to the store of general information on our topic.
Generally speaking, our history of oil in Texas also follows a time line, organized by decades, within which we cover regional growth and development. Chapter 1 begins with Texas before oil and the preconditions of development, emphasizing the first commercially viable production at Corsicana. Chapter 2 moves to the Spindletop boom and the initial era of Gulf Coast exploration. Chapter 3 offers an overview of the aftermath of Spindletop and Gulf Coast development. Chapter 4 covers the opening of North Texas and the regional growth it fostered. Chapter 5 takes us to discoveries in Southwest and Central Texas, as well as to continued Gulf Coast exploration and the increased application of geoscience. Chapter 6 turns to the discovery of vast reserves in the Panhandle and Permian Basin, the impact of these discoveries on state institutions such as the University of Texas and Texas A&M University, and attempts to manage mounting overproduction of oil. Chapter 7 focuses on the great East Texas oil boom—the problems it caused, the fortunes made in it, and its impact on regulation. Chapter 8 describes what happened to the oil industry in other parts of the state while East Texas boomed and during the remainder of the 1930s. The final chapter is largely concerned with the impact of World War II on the Texas petroleum industry. There our story ends, for the time being, largely because the second half-century is a very different story indeed, and it deserves separate and detailed description.
Closely allied to the growth of the oil industry is urban growth, both in established metropolitan centers and in new locations. Oil broadened the economic base of cities such as Houston, Fort Worth, Wichita Falls, and Beaumont and brought sharp increases in population. It also took small cattle towns like Amarillo, Midland, and Odessa and turned them into cities, as well as centers for regional oil industry management and service. In all of these towns and cities, oil broadened and diversified economies that had been based almost entirely on agriculture. Oil activity also prompted the creation of new towns, and it turned tiny county seats like Kermit in Winkler County into bustling centers with several thousand inhabitants. Paradoxically, oil also moved people into the countryside. It brought drillers and pumpers to remote leases; it brought company camps, large and small, to developing oil fields. Last but not least, as industry activity boomed from place to place, oil created a substantial transient population, workers and their families in motion from one oil field to the next. In short, during the first half-century of industry growth in Texas, oil determined where a tremendous number of Texans happened to be. One could work in the industry and live in a city or in the country, or be often on the road.
The story of the petroleum industry's first half-century in Texas must include its sequential spread over vast areas, but there is much more to the history than a sequence of gushers in unlikely places. Between the mid-1890s and 1945, Texas evolved from its predominantly agricultural roots into an industrial and managerial society. Petroleum was far and away the most important element in that profound change. Oil brought industrial employment on a grand scale to rural Texas. It offered an immediate and potently attractive alternative to life down on the farm or ranch, and thousands of Texans took that alternative. Many of them did not even have to drive to town to do so.
Simply put, the oil industry created economic opportunities. These opportunities, however, were not distributed through the whole population. During the industry's first half-century, the most direct beneficiaries were Anglo men. For benefits that reached women, African Americans, and Tejanos, one must generally look at the spin-off businesses, commonly demanding few skills and paying much less than other positions in the industry. On this topic, in particular, there are still significant questions to be answered in future research: What effects did millions of dollars in royalty payments and lease rentals and bonuses have on farmers and ranchers? What did petrodollars do in banking and business circles in places such as Houston, Fort Worth, and Dallas? What effect did petroleum fortunes have on philanthropy and charity? Each of these topics is worthy of a book in itself.
We address some issues because they have emerged as significant in previous studies of the industry. Thus, we will refer frequently to the growth of major oil companies and the expansion of communities of independent oilmen in Texas. A survey of the first half-century of the industry in Texas provides ample opportunity to describe the working relationships between these two sectors and, thus, to determine if they were more likely to be cooperative or adversarial.
We also address the scholarly argument advanced by some historians of the American West, Walter Prescott Webb an early leader among them, that the American West, including Texas, was an exploited province, in which Eastern capital plundered resources, leaving regions poorer and natural resources depleted. With respect to petroleum in Texas, this argument does not hold up. Rather, the reverse: by controlling politics, Texans were able to use outside capital on their own terms and to control the industry within the state. In fact, they exploited outside capitalists and ended up the richer for it. So much for the idea that the story of oil in Texas might be compared with one of colonization and exploitation by an outside power.
We will have frequent occasion in the story of oil in Texas to delve into the topic of politics and regulation. Texas did not elect an oilman as governor until Ross Sterling won the general election in 1930, but long before that date, petroleum-related issues had significant political dimensions. Once the elected Texas Railroad Commission secured a regulatory role in the petroleum industry, it was inevitable that politics and regulation were never very far apart. Conflicts in business strategy often surfaced as political or regulatory issues—for example, in the controversies over town-lot drilling, pipeline outlets, use of casinghead gas, or more oil production than markets could absorb. The Texas Railroad Commission had to handle such questions not only as problems in industry operation but also as political disputes. As it managed them, it progressively defined its regulatory role; we will describe the most important stages in that evolution.
The Railroad Commission's regulatory role also touches on a final significant topic, that of the emerging recognition of environmental issues. Problems such as how to store gusher production and how to handle oil-field brine and "cut oil" were not new when the industry emerged in Texas, but in Texas they took on vast dimensions. For example, the problem of disposing of the huge quantities of brine produced in the gigantic East Texas field in the late 1930s far outstripped difficulties in other fields. The problems were not new, but as we shall see, technology and engineering could not readily resolve them. Nor could the Texas Railroad Commission. Indeed, in some instances, the most up-to-date practices led to results that are unacceptable today.