What Makes Texas “Texas”? • Also Known as BLACK GOLD

TEXAS OIL AND ENERGY

Texas Railroad
Commissioner 

Christi Craddick has the numbers, and the impact Texas energy will continue to have on the nation. 

The Gusher Age

Yes, one more thing that happened in Texas that became part of the history of the whole United States—Texas had its own historical era. Texas oil production was also a key component of putting the U.S. ahead of Russia for the first time. 

Early seepage

Native Americans found oil in the soil of Texas long before the first Europeans arrived. They found it had medicinal qualities and used it as a salve. The first record of European use of oil was in 1543; late survivors of the DeSoto expedition used what they found floating on the water to caulk their boats. 

In 1866, Lyne T. Barret used an auger, fastened a pipe, rotated a cog with a steam engine, and drilled the first oil well in Melrose, Texas. Barret’s method was basic, but was the foundation for drillers to come, with improvements over time. His well, located at Oil Springs, produced about ten barrels a day, and his oil was proclaimed “superior in all its properties” by the Department of Emigration. 

Finally, the City of Corsicana had a major discovery for Texas. On June 9, 1894, while drilling for water, they struck oil. Corsicana went on to build the first well-equipped refinery in 1898. 

These early efforts were important, but were famously eclipsed by the great gusher at Spindletop on January 10, 1901. Captain A.F. Lucas, an engineer, was responsible for this first salt dome oil discovery. Although thousands of barrels’ worth spilled out before they could cap it, the well created competition for Pennsylvania’s oil business, and within two years, dropped the national price to $.34 per barrel. 

Texas Oil is On the Map

Spindletop was a bombshell that brought many people to the state. As well, many cattle ranchers, who owned a lot of Texas’ lands, suddenly found themselves in the oil business. The boom was energized again in 1916 when the first offshore gusher began production in Galveston Bay, all the while, more salt dome fields were producing across the state. 

The Lucas gusher at Spindletop, the first major gusher in Texas. Photo in the public domain, by John Trost January 9, 1901

The East Texas field, biggest of them all, was discovered by Columbus Joiner, a “wild-catter,” in October 1930. The success of his well sparked the biggest leasing campaign in history. 

“Wildcat” is American slang for a risky business venture. In the oil business, wildcatters drilled in areas not already known to have oil.

Impacts on Texas

The effects of the oil not only mitigated the effects of the Great Depression in Texas in 1929, it also made Texas the only state to create jobs in the Great Recession of 2008. Today, the Commissioner says, the 2018 Permian Basin boom has become the biggest in Texas history, making oil a healthy 35 percent of the current economy. Plus, thanks to the oil and natural gas severance tax (severing the minerals from the land), the Texas Rainy Day Fund is the nation’s largest. 


Don’t let the name fool you… The Railroad Commission of Texas was established in 1891 under a mandate to regulate the railroads. It is the oldest free-standing agency in the state and one of the oldest of its kind in the nation. 

In 1917, the Texas legislature declared oil pipelines to be common carriers. Since the railroads were already transporting oil, and the RRC was positioned perfectly to protect the environment and prevent waste, it was given jurisdiction over oil and gas. Railroads were deregulated nationally in the 1980s, but the RRC continues to manage the state’s oil, gas, coal, and pipelines.

Commissioner Craddick says, “Our name is historical and we like it. Plus, we’d rather put the $450,000 it would cost to change it to good use for our people and modernizing our technology.”


BOOM!

Commissioner Craddick reports just under half the oil rigs in the nation are in Texas and, every day, they produce 4 million barrels of crude; one-third of our nation’s supply, and more total than Saudi Arabia. Texas also pumps out roughly 26 billion cubic feet of natural gas daily; fourth in the world. “Russia is number one, but no one wants to do business with Russia. There are 35 countries doing business with Texas, and the United States is a net exporter of oil and gas for the first time in 70 years.”

To do that, the RRC transports oil and gas safely inside 470,000 miles of pipeline, and another 30,000 for residential delivery because it is safer in a pipe than on the road. 

Not being reliant on foreign energy means many things to the United States. “In the last few months, there were two significant military events in the Middle East that everyone talked about. What wasn’t part of the story was that oil prices, and at the pump, went up slightly for one day—we didn’t even notice. We don’t have to deal with Saudi Arabia, or Venezuela; that’s part of the ‘security’ in National Security.”  

She adds, “Oil and energy put about $16.8 billion into the state economy through what they pay. When all that energy goes to market, oil companies pay sales, property, and school taxes; and mineral payments. That severance money, through recurring bonds, goes into water and infrastructure projects around the state, education, Harvey reconstruction, and property tax relief.” 

Fun facts about booms… the Commissioner reported that right now in Midland, Texas (near the Permian Basin), the unemployment rate is 2 percent and McDonald’s employees make $15 an hour. “Tell your kids to get jobs in the Oil & Gas industry. Truckers and welders are in great demand; those with one year of experience are earning close to six-figures.”

Moving Forward

Texas has no plans to stop being a world leader in energy production. The industry is leading a revolution in hydraulic fracturing (fracking), which has increased the availability of cheap natural gas, with half the CO2 emissions of coal. The Commissioner smiles, “What many don’t realize is that fracking technology has been around for about 65 years. Today, we have revolutionized that with horizontal drilling. Companies are putting pipes into the ground, and using joysticks to make them turn corners for as much as three miles underground to get more gas. We also take their process for water protection very seriously and we pull about 20 permits a year to guarantee the energy we get is clean.”

As well, Texas is number one in wind power; representing as much wind power as oil refining capacity nationwide. “Our current administration has put common sense back on the landscape. Removing more than 100 regulations imposed by the previous administration has freed the energy industry to do what it does best. We are producing our own energy, creating jobs, and some of the cleanest air in the world is in the United States.” 

Electric cars are fine…

Ms. Craddick explains how oil and gas touch every part of our lives—even when we’re not driving. “Anything that is not 100 percent cotton or wood came from the oil and gas industry. Every time you take a prescription, write your name in ink, put on deodorant, walk on a putting green…even eat a cheese-flavored Dorito, oil and gas was part of that. Think of all the things in your life that are plastic; good or bad. And don’t forget the billion or so people who keep warm with it.”

Texas also has its own electric grid, which is studied by operators all over the world who wouldn’t mind integrating renewable energy the way we do. All this without federal intervention; i.e., the Texas way. 

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