23.1 The Birth of the Oil Industry

Search for Oil The demand for oil had risen dramatically after scientists had developed kerosene in the mid-1800’s. Petroleum is a dark thick liquid fossil fuel Fossil fuel is a fuel formed underground from plant and animal remains.

The Search for Oil The first major U. S. oil strike occurred in the late 1850’s. An oil company sent Edwin Drake to NW Pennsylvania to search for oil. One day when the drill reached 69 feet, a black liquid oozed out of the well. Local farmers ran through a nearby town shouting “The Yankee has struck oil!”

The Search for Oil Drake’s success led others to search for oil. Lyne T. Barret, a Civil War veteran, drilled for oil outside Nacogdoches and struck oil at 106 feet. George Dullnig accidentally struck oil while drilling for water in Bexar County.

The Search for Oil In 1894, drillers searching for water in Corsicana struck oil. Corsicana was now dotted with oil derricks and produced 1,450 barrels of oil in 1896. To process the oil, business leaders constructed refineries.

The Spindletop Strike Patillo Higgins, a brick factory owner believed that oil would be found under a salt dome on Spindletop Hill (or Big Hill) A salt dome is an underground formation that often trap oil and natural gases.

The Spindletop Strike Higgins ran an advertisement calling for a drilling engineer and Anthony Lucas responded. He agreed that oil was probably beneath Spindletop Hill. He started drilling there in June 1900 and found traces of oil, but his equipment was not strong enough to continue

The Spindletop Strike After finding business leaders willing to invest in new equipment, Lucas continued drilling. On January 10, 1901, Lucas struck oil. Over the next nine days some 800,000 barrels of oil shot out of Spindletop until workers could cap the gusher. It could be seen 10 miles away.

Boom and Bust after Spindletop The discovery of oil at Spindletop led to a boom in the Texas economy and created many jobs. Spindletop oil production peaked in 1902 at more than 17 million barrels of oil. That year 20% of the oil produced in the U.S. came from Spindletop.

Boom and Bust after Spindletop. The discovery of this huge oil field soon affected oil prices With large quantities of oil being produced the supply of oil outpaced the national demand. As a result the price of oil dropped. The rush of oil companies drilling oil at Spindletop also drained its oil reserves.

Boom and Bust at Spindletop Most companies formed went out of business when their wells dried up. Of those companies that survived, several grew into large businesses. The Texas Company became Texaco The Magnolia Petroleum Company and the Humble Oil Company were bought by the Standard Oil Company. J.M. Guffey, A.W. Mellon and R.B. Mellon founded the Gulf Oil Company. These companies employed thousands of Texans and boosted the state’s economy