all right class we are finally finally here and being able to talk about all so normally in face-to-face classes get this is something that just keeps coming up and up again because we think about Texas you think about oil oil is really the law is literally the lifeblood of the Texas economy in the 20th and 21st centuries and so we're finally gonna be looking at this and we're gonna finally start changing our phrase for the class that Texas is land rich cash rich this we're finally at that point because oil fundamentally transforms Texas so we're gonna be making a very quickly from being you know we're still in an agrarian state that's not you know there's no question in that but oil completely modernizes Texas so let's just dive right in oil is something that has been in Texas for millions of years it's you know here's where processed and people have known that there was oil for example you have seeps you know Indians would find oil see so you have these little areas where oil is you know the pressure is kind of pushing up the oil you know in little pockets up to the surface I mean so Native Americans would see this and they would think they'd have medicinal properties they would take the oil and you know use it as a salve on their skin not realizing that it's actually Carson Carthage in causing you know helps contribute to cancer but oil has always been here now the first time that you know people were drilling and actually struck oil is not going to be until 1866 so the first known one and so what you have is a guy by the name of Linda Barrett is actually drilling and producing some wells near Nacogdoches Texas but these are just going to be small little deposits they're really not getting too much oil out and it's not going to be till decades later that you're really going to have commercial production gonna take hold in Texas but when the very first come Hershel wells large wells in Texas is going to occur is going to take place in in Corsicana Texas of Corsicana is basically just think about East Texas on i-35 between Houston and Dallas and so what happens in 1894 is do you have somebody drilling a water well so they're drilling try to tap into an aquifer pumping you know you get a windmill you know the wind spins the thing and it pumps up the water to the surface so you can water your livestock and so it you have this company they're trying to they're drilling for water and they accident and they accidentally hit an oil pocket and they're like well we don't have any use for this and so they cap it and and continue searching for water but what you're going to have is investors in Pittsburgh because you've had oil wells in the eastern part of the United States for a while already they hear about this and they're gonna start funding oil drilling or in the Corsicana area by 1897 this Pennsylvania pencils pencils a Neah businessmen are going to establish the first commercial refinery in Texas and so they're pumping this oil out of the ground they're refining it turning it into products predominantly lubricants like grease and oil and kerosene because kerosene is good the main is the main product that oil is being turned into so kerosene is it's used for many different purposes but heating is is one of the main main uses just kind of you know that's what we used growing up as kerosene heaters in our house because well we didn't have central air or heat and we grew up in the country and so in so we just we just set these up in the house and they would just literally just burn and warm up the house and always areas for the family to congregate and so Karin says the main use use of kerosene and so by a 1900 this Corsicana oil field is in refiner producing about 500,000 barrels of oil a year and so after several mergers because companies buy and sell and trade off they eventually became the property of Mobil Oil all right let's get to the the transformative event in in Texas history and I mean there's no bigger event with oil then Spindletop and so what you have which is going to be near modern-day Beaumont in 1901 so you're going to have this guy by name of AF Lucas the name should sound familiar for lucas oils today and if you're really not familiar with that just think of the namesake for the Indianapolis Colts football stadium is is Lucas field named after this guy right so he's a Louisiana engineer and he basically you know he's been kind of what he's been studying we know where they're finding oils and what he's deducts is hey if we can find a salt dome more likely there's gonna be all underneath that and he knows of no bigger salt dome in the United States then at Spindletop just outside of Beaumont and so what he does is he's you know him he Standard Oil you know which is the big oil company in the United States it's of monopoly so if he heard of john d rockefeller or rockefeller center that's who we're talking about here so he's producing lots and lots of kerosene and so and so he's basically just you know he's the big bigwig but he's fine intensive oil in the east so he's like there's not that you know it may have some oil in texas but not that big but Lucas is gonna team up with the Mellon Corporation to help fund his exploratory search and so he basically deducts okay they've got this big oil field nobody really believes him he's going to take this huge risk and he is going to drill down at Spindletop and on June and on January 10th 1901 they hit oil and so Spindletop below so think of Spindletop as this huge oil reserve underneath the earth and with oil you have lots and lots of pressure on that oil and so once you tap into it it's just gushing out I could be shake up a coke and cart uncork it and I'm cork it but unscrew the cap it's gonna shoot out right and so when they hit this they knew is gonna be you know a significant fun but they didn't realize just how significant it was first off there's so much pressure in so much oil it took them nine days to cap it so once they hit that pressure they pop that that reserve that pocket all that is just coming out at such pressures that it's going to take them nine days to be able to contain it and stop this gushing so this think about this you could see in this image that it's gushing alright and so to put things in and so what this does this kick starts everything so basically when when when spin when news arrives a Spindletop everybody united states is saying we need to get the texas we can't there's tons of oil there we need to drill into it so how much oil is there let's let's put things into perspective so if you remember in Corsicana in nineteen hundred they're producing eight hundred thousand barrels of all a year spinning top is early 1901 I mean this is January tenth ten days into 1901 Spindletop blew off 800,000 barrels of oil on the first day alone so you can see when people hear about this they're you know they're gonna be rushing down in Texas because they want to get a piece of this of this pie and so basically whenever they do cap Spindletop and start producing Texas is producing over over a thousand barrels of oil a day so they went from 800,000 barrels a year to about a hundred thousand a day and so just over a week they're producing more oil than they had been the you know then in a year before and so by 1905 this is gonna jump up to 28 million barrels a year so within five years went from 800,000 barrels 228 million barrels being produced a year that's just nuts so let's wrap up Spindletop real quick because this is kind of an inherent problem with oil with the oil industry so they pop it they cap it they're relying heavily on that pressure to keep pumping that all up and and to be able to extract it but the problem is everybody's rushing in the Texas and they start drilling everywhere around Spindletop trying to tap into that same oil field and so what happens is you got too many straws in the soda and it loses pressure and so it's more didn't so they're unable to extract the oil but guess what where there is a need you know people are going to develop ways to to overcome this issue and one of it is this is whenever Texas whenever the oil industry starts can make it with pump jacks and so so all the oil industry is always seeking new ways to innovate and be able to extract oil from from the ground and I mean there's so many so many techniques I mean you got fracking you've got just pumping you got and and every ol field is different you know one of the craziest things is oil can come out in completely different colors from area to area and so some some oil is blue some is green some is clear some is cloudy it's absolutely fascinating once you know if you really dig down deep into into what's going on in oil so fortunately I have some friends that work an oil industry out in West Texas and so every time I go out there to visit I'm always pumping them for information trying to learn a little bit more I mean they actually will go in and dump chemicals into the ground where the oil field is mix it around in order to to get the right mixture for what they actually need and so they're actually doing a lot of this stuff and ground too it doesn't you know it's less so they're able to to get exactly what they need immediately out of the ground all right and so so it's going to be natural that after Spindletop goes dry there's going to be expansion people are you know they're saying hey there's something Corsicana that are down here in Beaumont there's got to be loyal in other places in Texas and so you're gonna have all fields that are going to be opening up in in Ranger in burkburnett Breckenridge that's Damania and so by 1920 Texas is producing a hundred million barrels of oil a day they're also going to expand out to the Panhandle into the Permian Basin and this you can just see the impact this has on on the economy on the local economy and then on the and on the culture of Texas I'll give you an example of sundown Texas I have some very close friends that live in sundown we go there quite regularly visit them it's a small well nowadays it's considered a to a high school but back in the day it was a 1/8 high school before they designated six-man as one a I don't understand that if you're not familiar and I'm surprised I had no I think but I really hadn't talked about that much in Texas so you can always tell the size of a community by the size of their high school and so in Texas its A's you got 1 a 2 a 3 a 4 a 5 a here in San Antonio lots of 5 a big 5 80s and I think they got now designation for 6a but if you go out to West Texas you got these real small towns for example my wife went to a six man high school which is below a 1a she had a graduating class of 12 and so their football team is place six-man football in so and so so where my friends teach that used to be one a but now six-man is one eight they're two way so this small little town out in the middle of nowhere Texas they have in their high school Stadium is absolutely phenomenal for barely having enough students to fold and the suit out a full roster because trust me you go see some of these games some of these players never leave the field but I digress so they have a nice high school my friend is a history and geography in religion teacher at the high school but when he got hired you know they basically gave him a house I mean they give ownership but he had a house rent-free all bills paid plus retirement on top of that so all he was spending his money on was food absolutely and why do they have all this kinds of money out there because of oil and you can see the adaption of culture because the mascot for this high school are the Roughnecks which is a term used for all field workers and so in sundown you just see oil field after all you know you see pump jacks everywhere even off to the side of a fairway on their on their golf course I mean no town this small should have a golf course but they do because there's so much money being generated from the oil fields that's surrounding this town and it clearly defines the culture in in that area and so one thing I'll encourage you to do is do a Google you know do a google map look of Edessa per Mia and just kind of brought me a get expand it out a little bit and you'll see it looks like a whole bunch of polka dots across the landscape that's not polka dots that's oh that's where pump jacks are and so where they do around the areas they kind of think they put caliche down and they shore up the sides in case there's a leak it contains everything and they're all spaced out perfectly you know it's all evenly spaced out and shows you just how important oil is to Texas I definitely encourage you to take a look at that all right well it's not the only thing he Texas is going to start getting into the natural gas business even though as we'll see later it's kind of seen as a nuisance they're gonna people are gonna say hey this is being wasteful we're gonna start tapping into it and so this new industry is gonna be born with the Lone Star gas company going to merge tap in trying to create a market for for natural gas refining is another industry that's going to that's going to have that's going to develop because what good is it to pump all this oil out of the ground if you cannot convert it into something useful and that's what we're fineries do and so by 1919 Texas is going to go from one refinery to 43 so if you think about only one refinery out in Corsicana but the expansion of all the oil wells you get it up to 43 by not by in within 19 years absolutely mind-boggling and so some areas are going to be more concentrated like Houston Corpus Christi mainly because you have the ship's you're refining it and you can put on the ships to distribute for distribution purposes for trade purposes but over time the oil companies are going to are going to start consolidating down Laura so Standard Oil is gonna be is gonna be broken up it with the with the trust-busting and so what you have are these companies that are going to come in and start buying up all these all all these small oil companies become become large but still we're going to be split up enough to where it's not a monopoly like Standard Oil so you'll get all companies like Gulf is it a wonder there's one called Texaco humble that's it which is an X which will eventually become Exxon and Mobil which Exxon will eventually buy up and so it's ExxonMobil today I mean so it so you can see this consolidation and in the East Texas you're going to have you're going to have a lot more more control over the oil field by oh and let me refer to me I forgot to bring this show a slide so he talked about the expansion of refineries one of the one of the founders of refineries is jeaious colon and their course of Canada so he helps establish the one there in Corsicana and expand it out to 43 so I throw that name back out there so I apologize for for getting a little out of order but by the 1930s the East Texas oil fields is going to be dominated by cm dad Joyner and so Texas is produced so underneath his leadership Texas is producing about 200 million barrels a year by 1933 and hot oil is going to become a major issue and so I'll just I want to talk more about this later but one thing to take into consideration is kind of the same issues that the farmers are fighting with the overproduction is what the oil people the old men are gonna start experiencing later but more importantly like I said we'll get to that here in just a little bit but let's talk about the impact that the oil industry have on Texas I've told you already this changes everything and so one of the most obvious impacts is going to be wealth this brings in lots and lots of money to Texas it's just unfathomable just how much money this creates in Texas so let's look at some different areas some different ways that it's creating this wealth within the state one is the sale of land because you remember Texas is so think about this when you know you have access to an all pocket from that land what's going to happen to the value of that land it is going to skyrocket and so in Texas the state sells it they can demand a much higher price and so for instance some land is going to go from $10 an acre up to $50,000 an acre and so what is that doing to the coffers of the state government it's filling them what about these landowners that have all this land but they don't have the technology of the means to extract oil well they got old companies they can sell it to or to lease the land to and so that's where mineral rights come into into play because nobody in their right minds in Texas gives away their mineral rights now you can purchase land and not be able to control the mineral rights that somebody else owns it's something completely separate from land deals and so so think about you know that just isn't lis creates wealth because the idea of there being a resource underneath your feet is going to increase the value of that land I think about the manufacturing of equipment really and I really need to include this picture in the in the slides I mean that's where Howard Hughes makes a lot yeah his dad started the company and he really made the money is with the equipment for all workers no yeah just think about everything ago that goes into establishing an old film you know or well you need all the equipment you need trucks to get stuff in and out you need pipes you need drills you need you know you just think about all the insular ease that contribute into it and so all that is creating creating money also you got to value in the oil itself you're making money off the direct sell of the oil it's also attracting a lot of people to the state because people want to come in there's jobs there's opportunities so creation of all these companies and so with that people are getting paid and so the economy is up and running you bring in people that are selling old field supplies oh yeah I think you know and just think about the huge market that's involved in that I'll tell you one quick story mean you work in the old field I mean it can be feast or famine we're experiencing that right now a lot of old field workers are being being let go because the price of oil is down the economy is is you know is struggling but when things are good these people get paid very well give me an example when I went to go I was at the dealership buying a pickup truck and you know keep waiting to go talk to the financial guide and there was this young you know kind of 20 21 year old kid sitting there and he sir can kind of kind of buggy real quick I'm about to get a truck I'm like oh congratulations and he goes I got a quick question um it was a 25% interest rate good and my jaw hit the floor and I said that's horrible I mean that's a that's a horrible interest rate he but he's a young guy doesn't have credit but he's buying a pickup truck and he says well I got a job in the old field and making good money I'm like hey go for it just pay it off as quickly as you can so you can see just how much it encourages how much it will stimulate the economy and kind of kickstart people's people's lives so he had the money he was making enough money to have a 25% interest rate on a vehicle loan and not even bat an eye at it and then also banking lots of money in the state and so banks you know banks are going to be are going to be critical for storing all that wealth and so the one problem is that the Texas State Constitution does not have anything to charter a state bank and so it's chartered national banks and so what they did was they amended it to allow state banks and so this way it can assure the money more that money will stay within the state and so what this does just increase the number of state banks across Texas they also established a depository insurance law which we talked about in the previous lecture where people's deposits are guaranteed and so basically bang in so this creates this huge this really drives a new frontier in Texas the financial frontier some more banks more p.m. in banks people work at banks have bad reputations because they're making money with other people's money they're not actually out there working but still and also insurance companies or what name they you know or this is one of the reasons why people are fought hard to keep insurance you know all these insurance companies coming into Texas to keep all that wealth within Texas because all fields you need insurance you you know think about everything that's being generated the land you know land values of vehicles everything all that's going to be you're going to me need more demand for insurance and so all and so you need the banks in in these financial institutions because insurance companies are financial institutions to be able to manage all of this wealth also another major impact is urbanization this one's a this one's kind of a given because the population of Texas is almost going to double mainly because of this oil industry so many people are coming to Texas to take advantage of this industry that this that you know the population doubles within twenty seven thirty seven years that's just mind-boggling if you think about it and so with this you have the establishment of boom towns across the state of Texas so for example in Kilgore Texas I mean it just literally almost overnight I sprung out a sprung out of nowhere and so they gained a population about 10,000 and over the or the matter of a few years and so what happens is you know you have these boom towns that emerge and people are going to move there to work and you need all these services for the old film not only that but these you know done just for the companies but for the workers I'll give you an example if you ever drive the back roads down to Corpus Christi you can see some of this with when they when they open up the Eagle Shale field the you know you have a whole bunch of mobile homes and temporary housing that's why if you you know like go through Kennedy and other places you can see you know these hotels these we pay for the week hotels temporary housing for these all workers that are that are working out there and so think about all the fast you know all the food industries that's going to follow behind and all these services to cater to all these men because what do they have in her pockets money and so not only that but herb but already established cities are going to grow in population because because they're going to become headquarters for the oil industry Dallas in Houston are really great examples Fort Worth to to some extent San Antonio as a distribution center between Eastern oil fields and the Western oil fields and so more people are going to be moving to the cities to get these jobs that are supporting the oil industry instead of put things into perspective in nineteen eighteen ninety fifteen percent of Texans lived in urban centers by 1970 it doubled to 30% now are we so made behind the national average YES on the national average it's about 50 percent but Texas is still a highly agricultural state but this is a pretty quick jump in urbanization all because of the oil industry and then also this new fuel is going to is going to drive other industries so and so for example it's gonna really drive the automobile industry now you may need rec reaction be like well that's just that's just a given come on it's a you know you obviously you need gas for cars yes but the thing is is the original car engines it will actually had an electric car very early on most people don't realize that but we had a major debate is is are these vehicles gonna run off you know most everybody's pushing for ethanol which is a fuel derived from corn but what happens is you have this by-product whenever you convert oil into kerosene as by-product that they had nothing they couldn't find any use for it's called gasoline and so the olala mobile industry were like hey wait a minute we can we have we can start converting our engines to run off of gasoline yes you do have some engines that can run off of both today but trust me you don't want to use ethanol ethanol is well just tear up your fuel system I don't care what anybody says it's there's a reason why you have special vehicles that allow you to use it because it's very corrosive in nature so so it close so now automobiles are going to go into gasoline into and so you can see this influence on that market railroads are going to be instrumental in the transportation of oil so we talked about the Railroad Commission this is why I'd called it the most powerful entity in our government agency in Texas is because they control the transportation of the oil and whoever controls oil controls almost everything in Texas today now ships are going to be converting more to using get and be using gasoline and other fuels instead of set of cold and then of course with the introduction of the gasoline engine and combust an internal combustion engine you're gonna need you know more cars gonna be purchased in Texas and you need permanent roads and so Texas is going to establish a Texas good roads association which is going to lobby and stand help build better roads connecting cities and so if you want to look at some social and cultural aspects of this isolationism is going to break now remember when people were born before this time period most people never traveled more than a hundred miles from the place they were born I mean you do have some opportunities with the railroad to travel but other than that you really can't travel very fast very far when you have highways being built connecting these cities all these barriers are coming down and now people can do in take Sunday drives they can go visit relatives and city over you know they can go to go see some attractions so say people in San Antonio in New Braunfels like hey let's go check out some egg farm it just sounds nasty snake farm pretty much is so Google's a song snake farm and you'll you'll get that reference all right but all with all this comes comes danger lots and lots of danger so for example in New London I just want to see if I had added a picture but I hadn't in New London Texas you know kind of like when I had talked about was sundown you know the local oil companies is gonna help the the local schools and so in New London the oil company they're a natural gas company is gonna let the school tap into the company line for fuel and so and so this is saving the school about $3,000 a year in in you know heating cost for for further further for the high school unfortunately a leak developed within that natural gas system so I filled up behind the walls it filled up the basement and eventually on March 18th 1937 the build that gas was it was ignited and exploded because there was no additives added to the natural gas to make the you know to make this smell of it noticeable and in the end about 300 students and teachers are going to die are going to die from from from this explosion and so there is some danger involved but also one of them so so you know will working is inherently dangerous as well so a lot of workplace accidents and deaths are going to occur as well alright let's talk about competition and conservation because there are some issues that going to derive out of all this because one of the things that people start doing if you go back to that first slide and I'll just go on back that's a lot of oil wells just almost right next to one another and so this is a major problem you know like I had said too many straws in the soda and also this is dangerous because if one well goes you know you know ignites they can create a chain reaction and create even more damage in these old fields and so you know one thing that kind of contributes to some of this is that a lot of these old fields are in at least initially we're burning off the natural gas or just releasing it into the air it was estimated that in the early days of the oil industry they were releasing about 1 billion cubic feet of natural gas into the air or burning it off per day 1 billion cubic feet because they didn't have a use for it initially and so you can see why somebody's like hey let's let's tap into this another issue that's happening is lots of pollution me and this is mainly for people that want to sell their lands it would drill they would hit oil and then just let that old dump onto the ground so they when somebody comes by they can say hey look there's all on this land I want my money I want you to pay me more and so that's just naturally polluting the environment and so the railroad commission I mentioned earlier is going to organize is going to reorganize in 1930s to include transportation of this oil and so they basically control the production and transportation of all of this oil and so one of the things that they're going to do is they're going to say alright we're producing way too much everybody is pumping oil trying to get it to the market and all it's doing like the farmers is dropping the price down and so the Railroad Commission wants to control the amount of production so they can keep the the price of oil per barrel up higher and so they're actually going to you know in order to enforce it they're going to declare martial law about 1931 to try to limit the production of oil in the state so that they don't run out they don't produce themselves out of the market and so and so if you think about the year this is in the depths of the depression where everybody is scrambling to try to keep making money but in the end but the state of Texas is saying if you keep this up there's you're going to just completely destroy your industry and so for the good long run you need a limit how much oil is produced the limit oils produced onto the market it's going to drive the prices up because there's gonna be more demand but there's an in so basically they said I in total everybody can produce about 300 to 400 thousand barrels a day to try to artificially inflate that price well some of these guys especially you know dad see him dad Joyner is gonna say no no no so he starts to doing this he's going to continue to produce a whole bunch of that oil more than what they were regular than the regulations stated by the state of Texas he's just gonna ship that across state lines without anybody knowing and so this is going to be called hot oil so illegal oil that he is producing outside of these parameters and so this is going to lead to some conflicts and some possible violence out on these oil fields particularly out in East Texas we have these guys trying to skirt skirt the federal law out of the state law but let's just wrap this up and let's finish up talking about oil because politically speaking this changes everything in Texas because remember Texas had always been politically has been driven because it doesn't have any money it doesn't have any cash and all it has is lamb and so basically Texas is gonna say Oh companies thank you very much we're gonna start using you know the weather there the taxes that's generated that you are generating to help fund our state government and it gets our state government out of debt and it's going to completely distort the tax structure in the state of Texas from that point for this is the reason why we do not have a state income tax because who's paying it all the oil companies all companies are driving our fun are essentially funding our state government and keeping it going so combine that with the sales taxes is what's really driving the state of Texas and so also all companies are going to so even though you're having this so o companies are still going to have a lot more influence within politics within the state so they're able to really influence legislation in there in different aspects in their favor even though not all of them are you know they don't get a lot of what they want but in some ways you can look at that limitation of oil as the people that are going to benefit the most are the larger oil companies in the state of Texas because they can hit their mark more readily every day and then also politically speaking you're going to finally have a true rise in labor unions in the state of Texas and so because companies start reducing wages even there even when they are increasing the amount of work that they expect their workers to make a year and so this is when the American Federation of Labor is going to really we've mentioned them I've mentioned them before but it's really going to grow into a force you know you know a force that the state government and these companies have to reckon with by the 1940s and so like I said as you can see oil brings Texas into the modern era this fundamentally changes everything for the state of Texas and this is a great pivot point for the next part of the class and so for well Louie rephrase that for the last part of the class and so with that this is the last lecture before this is this is a very important lecture to have as as we go on with the next unit of this course so with that said feel free to contact me if you have any questions keep up the good work everybody take care bye