Gushers: The Texas Oil Boom and Industry

Updated December 6, 2022 | Infoplease Staff
Texas oil industry
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The United States is the world’s largest oil producer. For 150 years, Texas history and the oil and natural gas industry have been inextricably linked. In 2019, around 41% of all crude oil production in the US came from the Lone Star state. But how did this happen and what has been the effect of oil on the state of Texas?

What Is the Texas Oil Boom?

The Texas Oil Boom was a turning point in the history of the state of Texas.

Prior to this, the Texan economy had mostly been reliant on agriculture. The state consisted of mostly rural towns that had subsisted as homes for workers building the first railroads in America. In addition, the development of the railroad network helped farmers transport their cattle more easily and further.

However, the arrival of oil in Texas led to a sea change in the economy and petroleum became the source of new wealth and prosperity among Texans.

Where Is the Oil Boom in Texas?

There had been a significant discovery in 1894 in the city of Corsicana while drilling for a water well. This led to the first refinery in the state, and it shipped its first production in 1899. Corsicana became one of the state’s boom towns. The Powell Field in Navarro County was then discovered in 1900.

However, the Permian Basin (spanning parts of west Texas such as Midland and Odessa) is the nation's most prolific oil patch, producing over 2.7 million barrels of oil per day.

The oil ‘capital’ is considered to be Houston, Texas's biggest city and home to many of the world's major oil and gas companies such as Chevron. Other cities, such as Austin (home to the University of Texas) and Dallas, have also benefited significantly from the oil industry.

What Oil Discovery Started the Oil Boom in Texas?

The oil boom began in Southeast Texas. Native Americans had discovered oil coming from the soil a long time before the European settlers.

However, the Texas Oil Boom officially began at the start of the 20th century (10th January 1901 to be precise). A huge oil, gas, and mud spurt occurred at the Lucas No 1 well at Spindletop near Beaumont; 90 miles east of Houston and a short distance from the Gulf of Mexico.

The spurt reached a height of 150 feet and began producing nearly 100,000 barrels of oil a day. The discovery sent shockwaves across the country and, almost overnight, launched the oil industry in Texas. Indeed, many of the most successful oil companies, such as Exxon and Texaco, can trace their beginnings from that event.

First Oil Well in Texas

The first drilled well to produce oil in Texas was located in Nacogdoches in 1859 using basic rotary drilling. However, the drill did not yield sufficient quantities for commercial production.

The first commercial Texas oil well was completed on September 12, 1866, west of the Sabine River at Oil Springs, by Lyne Taliaferro Barret. It was called the “No. 1 Isaac C. Skillern” and came in at a depth of 106 feet, producing ten barrels a day.

Barret then met John F.Carll— widely considered to be the man who invented petroleum geology and petroleum engineering— who helped him understand more about the geology of the land and helped him get financial backing. However, huge fluctuations in the price of oil led to his backers withdrawing their support and Barret ended up making significant financial losses and going back to his job in a general store.

The field lay dormant for 20 years until new wildcat drilling companies revived the well and began drilling once more.  

Texas Oil Boom Timeline

Ocean oil rig
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To get a comprehensive overview of the entire history of Texas and its involvement in the oil industry, let's take a look at the biggest events that mark the timeline of the Texas Oil Boom.

1543: Spanish Explorers Discover Oil in Texas

Luis de Moscoso Alvarado was a survivor of the De Soto expedition and was believed to have recorded the first sighting of oil in Texas. He observed oil floating on the surface water after the expedition was forced to land between Sabine Pass and High Island.

1854: Texas Settlers Smell Oil

Frederick Law Olmsted, a respected writer, wrote about oil during his travels through Texas. He recorded that “the approach to the rude bathing-houses, is over a boggy margin, sending up a strong bituminous odor, upon pools in which rises a dense brown, transparent liquid, described as having the properties of the Persian and Italian naphthas.”

1866: First Drilled Oil Well in Texas

Not only was this oil well the first one to be implemented in the state, but it was also a high-producing one, thanks to the expertise of Lyne T. Barret who truly struck liquid gold when he drilled down into the soil of Nacogdoches county.

1894: First Notable Discovery of Oil

American Well and Prospecting Company, a water-well contractor, discover a new one while seeking a new water source for the city of Corsicana.

1901: Oil Discovered at Spindletop

As many historians agree, the Spindletop oilfield discovery was the first lucrative one of the 20th century and remains the birth of the modern petroleum industry in Texas— and the rest of the nation.

1908: First Offshore Drilling Well

The first offshore drilling took place in northern Galveston Bay with the discovery of the Goose Creek Field. The field was abandoned after a series of dry holes until a gusher was found in 1916.

1911: Electra Oilfield Discovered

A water-well drilling outfit in Wichita County hit oil causing the oil boom to begin. The Electra oilfield produced approximately ten million barrels between 1911 and the mid-1920s. The population of Electra grew from 1,000 people in 1910 to 5,000 within months. 

1914: Houston Ship Channel Opens

The opening of the Houston Ship Channel ensured that oil could be transported not just nationwide but also worldwide opening the Texas oil industry to a much wider market.

1919: Baytown Refinery Opens

The Humble Oil Company opened the Baytown Refinery in 1919, just outside Houston. Its location, between the oil fields of East Texas and the Houston Ship Channel, made it a prime location for production and distribution. This, along with offshore drilling in Galveston Bay (see above), cemented oil as a thriving industry within Texas. The refinery is still the second biggest in the world.

1930: East Texas Oilfield Discovered

The discovery of the East Texas oilfield in 1930 saw the largest and most prolific oil reservoir in the United States open. Since its discovery, 30,340 wells have been drilled across 140,000 acres, equating to around 5.2 billion barrels of oil.

The 1940s: Post-War Demand for Oil

World War II saw unprecedented demand for oil. The Air Force used as much oil in one day as in all of World War I. However, the post-war years were the glory years for Texas oil, with both domestic and foreign demand soaring to meet the demands of both the Marshall Plan and the huge increase in automobiles on American roads.

By 1951, production would hit a billion barrels a day and 1956 would see its highest-ever number of wells in production.

The 1950s to 1970s: The Rise of Foreign Oil and the Oil Crisis

Middle Eastern oil had first begun in Iran at the turn of the 20th century. However, it wasn’t until the 1950s that many Middle Eastern countries (such as Saudi Arabia) nationalized oil production and became major producers in their own right. The creation of OPEC in 1960 also led to less dependence on American oil. By 1972, the state of Texas had experienced peak oil production and its capacity to plug gaps in international supply was failing.

The oil embargo during the Arab-Israeli Yom Kippur War of 1973-74 saw Middle Eastern and OPEC countries stop exporting to the United States, and led to shortages and long lines of cars at gas stations (as well as a sharp increase in gas prices). As the rest of America struggled with long car lines at gas stations, Texas boomed as both production and exploration within the state soared.

The 1980s Onwards: Oil Price Collapses and Renewable Energy

The oil crisis of the 1970s led to high energy costs, high inflation, and an effort to move away from fossil fuels towards renewable forms of energy sources (such as wind, solar, and ethanol production from corn). 1981 saw the peak in the oil price of $31.77 and the discovery of new oilfields in the North Sea ‘glutted’ the oil supply.

By 1986, oil had fallen to $12.51 but still, oil producers piled up debt buying oil rigs and banks began calling in loans. The scale of bankruptcies was colossal. The price of oil never reached 1981 highs again until 2004 (although prices have topped $100 since).

How Did the Oil Boom Affect Texas?

Massive oil refinery
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The Texas economy had traditionally been built on agriculture. However, the oil boom led to it becoming a petroleum economy. In addition, the population of Texas, which had traditionally been rural, became more balanced, and, by 1980, the state was 80% urban.

What Were Some Positive Effects of the Oil Boom?

The availability of cheap oil saw Texans buying automobiles which meant roads were paved and travel became much easier. Mechanization of farming also led to an increase in manufacturing and production. In addition, taxes from oil revenues meant that state coffers were swelled.

Education has been affected positively by the oil boom. The Permanent University Fund in Texas receives revenue from all associated oil activities and is one of the largest university endowments in the world. This has helped to build institutions and develop land over the years. The Permanent School Fund exists for similar reasons.

In addition, many oil philanthropists have donated generously to health, social and arts programs within the state.

Which Was a Negative Effect of Texas’ First Oil Boom?

In the early days of the Texas oil boom, many towns that did not have oil as their main industry died out as residents either left for bigger, more affluent places to seek work or fortune. There were also many individuals who bet fortunes on wells that did not produce, leaving many bankrupt and penniless.

However, longer term, the most negative impact of the oil boom has been environmental. The oil boom has led to damage to wildlife along with noxious emissions, soil erosion, and water contamination (not to mention the visual impact of drillers on the landscape).

How Long Will the Oil Boom Last in Texas?

Oil production in the Permian Basin is expected to grow 50% over the next decade alone. Estimates have claimed that there is enough oil here to provide for the next 200 years (although this claim has been questioned).

In addition, Russia’s invasion of Ukraine earlier this year has meant that western countries need to become more self-sufficient when meeting energy requirements. This will no doubt mean a greater reliance on US oil production.

However, this is likely to conflict with the need to tackle climate change and hit environmental targets. A 2021 UN-backed study says that the world needs to cut more than half its production of coal, oil, and gas in the coming decade to maintain a chance of keeping climate change from reaching dangerous levels.  

Ultimately, Texas (and the oil and gas industry) will keep producing oil as long as there is demand. However, how long for remains to be seen as the world wakes up to climate change and new forms of energy.

Are you interested in more interesting Texas history facts? Why not peruse our detailed overview of the Texas Revolution, including Santa Anna and the Alamo, or discover a variety of Natural Disasters in Texas!

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