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The Economy of Texas and Oil Boom

Free Essays of Economics The economy of Texas is the second-largest economy in the United States in terms of gross domestic product. Besides, it would occupy the fifteenth place in the list of the richest states in the world, if Texas were an independent country. At the same time, the Texas economy is very mixed. Texans are engaged in mineral processing and in the production of a variety of industrial and agricultural products. In fact, some significant developments in the history of Texas in the 20th century have established the foundation for the above-mentioned economic prosperity. In the early 20th century, people explored the rich oil fields in Texas, and oil production has become the largest sector of the Texas economy. Furthermore, the oil boom in this state affected the rapid development of technology and contributed to the increase in demand for fuel. The oil boom has led to the reformation of the economy, industrialization, and minimization of the agricultural impact on the development of Texas.

The Origin and the Essence of the Oil Boom

The oil fields in this region had existed for many years before explorers arrived in this territory. Some indigenous tribes in Texas informed explorers from the European countries that unknown substances in the soil had useful medicinal qualities. In 1543, Spanish explorers went on an expedition in the Texas region. Their captain reported that his team discovered oil fields and used this substance to repair boats. In fact, the end of the 19 century marked the creation of the first oil refinery and first pipelines. Moreover, at that time, first oil explorers discovered rich fields and extracted a huge amount of oil. However, the income from oil extraction was sufficiently high to justify the efforts and financial costs. Furthermore, a farmer George Dullnig discovered oil when he was drilling for water, but this serendipity did not turn into a successful business. In 1894, drillers in Corsicana engaged in the financially profitable oil exploration in this area, giving the beginning to the oil industry. However, the communities that lived in the area and were not interested in finding oil changed their location. In fact, 1895 became the year when Joseph S. Cullinan made a great contribution to the creation of the first well-prepared refinery in Texas.

The beginning of the 20th century marked the discovery of Spindletop, a great oil field in Beaumont. At the end of 1900, Texans explored this region and found richer in the oil field. With the rapid progress, the economy of Texas changed its agrarian roots and joined the industrialization process and great petroleum age. Furthermore, it affected the development of railroad transportation. In turn, it modified the agricultural business sectors by making the delivery of products rapid and less expensive. As a result, livestock farmworkers lost the necessity to spend time on the long roads to export their goods to the Midwest. In the period when the oil appeared in all regions of Texas, the transformations were considerably more significant. The spread of oil business started to replace farming as the main element that caused economic development. Besides, this process has more significantly influenced the lives of Texans comparing to the development of railways. The effect of oil on the state is regularly examined, including corporate progressive development, rise in the individual and corporate social prosperity, the general economy of Texas, and legislative issues. The oil boom also significantly influenced the lives of the individuals who had landed with oil resources. Besides, it affected the lives of people, who were directly involved in petroleum investigation and further processes of production. The process of the new oil field’s exploration prompted the establishment of many towns in Texas. Besides, it resulted in the foundation of organizations, which turned into international corporations, and in the accumulation of tremendous individual gains. In contrast, the development of the oil fields prompted a decline in the development of many towns, which engaged in the coal industry. The financial contributions on oil fields that have become unprofitable led to the decline of many organizations. Thus, the oil boom has significantly changed the way of life in the state. Therefore, this historical moment encouraged the development of Texas and changed the major spheres of industry.

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The Emergence and Impact of the Spindletop Field

The oil field that established Texas as a leader of the petroleum market was Spindletop. Investigations in the region of the Beaumont had started in the 19th century. After some explorations, the significant engineer of the oil fields Capt. Anthony F. Lucas discovered this field. Originally, his organization delivered more than 70 thousand barrels of oil per day. In fact, 1902 marked the peak of annual oil production from this filed with near 20 million barrels. Spindletop affected many industries in this region, bringing a few other essential developments. The oil development in Texas became the reason for the emergence of many wildcatters. Besides, a huge number of people were searching for jobs with a good salary. In fact, these people became the basis of the oil industry in Texas in 20th century. They held the administration, supply services, and production centers. Moreover, workers controlled the work of the refineries and the special equipment for oil exploration. Such mobility of actions in Texas was similar to California’s famous Gold Rush, but people tried to discover oil fields in these areas. After three years from the first discoveries, a few extra significant fields were created in the region of the Spindletop. Organizations were soon settled to build up the oil fields. In fact, some of them have turned into the leaders of the oil market and remain on the top today. Among them are Gulf Oil, Sun Oil Company, Magnolia Petroleum Company, and the Texas Company. In 1900, the production of oil was near one million barrels. In 1902, this oil field produced near 20 million barrels or 94% of the US overall oil production. This situation marked the transformation in pricing strategy because the companies extracted a huge amount of oil. Thus, the oil in some major towns became more expensive than water. The innovative pipelines, special export facilities, and the progressive refineries turned into the advantages of the industrial area in Texas. In fact, the emergence of this significant oil field made an inestimable impact on the USA and Texas. With an aim to find new rich fields, contributors invested large sums of money. Oil from Spindletop was cheap, and this condition helped transform the American economy and industries. Consequently, Spindletop became the first fundamental element of the oil boom in Texas.

The Emergence and Impact of the Oil Boom in North and East Texas

In the period between 1902 and 1910, the oil production spread from the Spindletop to the regions of the North and East Texas. The richest fields were in Wichita Falls, Petrolia, and Brownwood, where people discovered fields with oil. Furthermore, W.K. Gordon founded the Ranger field near Wichita County. In fact, the rapid rise in oil production in North Texas affected railroads to choose oil instead of coal. Thus, they switched to oil transportation and destroyed the development of coal mining towns. Besides, in 1912, people discovered some significant oil areas in the territory of Burkburnett. Such activities became the basis of the motion picture called “Boom Town” in 1940. The phenomenon of the oil boom became regular for every town of North Texas. However, the facilities for minor cultivating groups were unable to handle a large number of people. The areas did not have enough hotels and restaurants to welcome the unexpected inflow of people. Such conditions pushed people to build little shacks or put up tents. Besides, the presence of rich oil fields affected the desire of people to come and settled in this town, overcrowding the local schools. In the period of 1920s, people discovered oil fields in Limestone County and Navarro County. Consequently, North Texas became an important region of the oil boom.

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The beginning of 1930 marked the emergence of the significant oil fields in the East of Texas. Initially, it was one of the greatest fields in Rusk County. Oilman Columbus Marion Joiner started to investigate the territories previously rejected by big organizations and found this essential field. However, the overproduction of oil again resulted in a drop in oil prices. Therefore, discoveries that had transformed East and North of Texas into significant regions marked the industrialization of Texas and the dominance of the oil production industry in the economy of this region.

The Overall Impact of the Oil Boom on the Texas Development

As it was previously mentioned, the agricultural industry was the major economic business of Texas at the beginning of the 20th century. However, the oil boom became the reason for the great transformation and replaced agriculture with efficient industrialization. Despite the fact that refineries existed around the Beaumont and Houston regions, the process of oil exploration spread the overall territory of the state. By 1940, the estimation of oil discovered in Texas surpassed the number of every agrarian product in this region. The expansive amount of oil fields in Houston, Baytown, Texas City, and other surrounding areas made an appropriate environment for the economic development of the region. Steel mills, progressive chemical plants, cement factories, and other kinds of industries that could profit by a vast supply of accessible fuel quickly multiplied in the state. During the 1930s, Houston had risen as the state’s prevailing economic leader. Furthermore, the oil boom corrected all the negative consequences of the Depression in this town. Moreover, the process of industrialization and increase in oil production in Texas helped replace the Depression with economic success, unlike in other regions of the US. The rapid rise of the oil industry contributed to the development of other spheres in different industries. Besides, companies emerged in various territories of the state. In addition, it caused the construction of many refineries, innovative railroads, and oil derricks. In 1907, Texas became one of the leaders in lumber production. However, agricultural production also reached a high level of development because the population in the state had increased, creating a great demand for the products. Consequently, the oil boom affected the development of essential industries in Texas.

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Cities with oil fields required new buildings and houses for the workers. As a result, the oil boom caused the rise of the construction industry. This process affected the changes in the appearance and economic development of the cities. For example, the innovative buildings in Dallas and Waco became the first skyscrapers in Texas. Besides, The Perlstein Building in Beaumont became the first skyscraper, as a direct impact of the oil industry development. Moreover, Houston became one of the leading cities in that period. This situation emerged because of great financial income from oil sales that helped complete the Houston Ship Channel. In fact, this event had made a great positive impact on the trade market and overall prosperity. Furthermore, the oil boom contributed to the emergence of many hotels, rail and road networks, and industrial complexes. For example, The Edson Hotel was considered the highest hotel construction in Texas for several years. Besides, this process caused the creation of many new institutions, including the Museum of Fine Art, the University of Houston, the Houston Zoo, Hermann Park, and the Houston Symphony Orchestra. The oil boom became the reason for business development. Big towns in Texas started to build new financial centers, business offices, and municipal buildings. Furthermore, this process caused the development of aircraft manufacturing and the emergence of electronic innovations. As for the road networks, the oil boom contributed to the rise of automobile ownership. Such a situation affected the presence of additional financial resources in the government. As a result, this condition led to the development of highway systems. In fact, this transformation type also affected the trade industry. Consequently, the oil boom had a significant economic influence on Texas in the 20th century.

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A major improvement in the government of Texas as a result of the oil production tax established in 1905. In fact, the great revenue made it possible for the state to ignore the basic income taxes, which were significant in other states. For example, the income from oil taxes was more than one million in 1919 and six million in 1929. By 1940, the revenue from the oil industry covered half of all taxes in the state. However, features of the Progressivism multiplied governmental issues in Texas in the mid-1900s. The great financial income caused politicians to allocate funds for the development of the educational and highway systems. However, the government did not control the business and only provided minor wage regulations and almost no control over child labor. Besides, some laws limited the power of outside investors to control the oil companies. Moreover, the situation with labor reforms and overall mistrust was undesirable, and the population worried that capital outside the state would violate the political power and impact in Texas. Consequently, the political situation in Texas was controversial, since it had many advantages and weaknesses.


The period of oil boom became a time of essential changes and economic development in Texas. Initially, the first reason for this process became the exploration of the great oil field in Beaumont. This discovery was remarkable in its size and marked the period of great development and innovative industrialization. Furthermore, the population discovered rich oil fields in North and East Texas, which helped the development process to cover the entire region. Texas became one of the most developed regions in the US, with a leading place in the oil industry. Furthermore, the oil boom had a great transformative impact on many different industries in Texas. Besides, this process affected the construction industry, different businesses, and political development. Therefore, the oil boom became the significant basis of the Texas economic development in the 20th century.

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