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How Houston Became an Oil City

Jul 5th, 2021

If you live in our luxury Houston apartments, then you’re no doubt aware of Houston’s connection to the oil and energy industry. 

But how did the city become the center of the oil industry? It all starts with some algae, an ocean, a water well and a shipping channel! 

How Houston became an oil city

Millions of years in the making

Crude oil is a type of fossil fuel, meaning that it’s made from the remains of organisms that lived millions of years ago. Most notably, it’s made from sea creatures like zooplankton and algae that lived while much of the land was covered by water. 

This was a long, long time ago, by the way. Before even the dinosaurs roamed the Earth! That’s a fun fact you can bring up next time someone says that plastic bags are made from dinosaurs. Ancient sea creatures, yes. Dinosaurs, no.

Anyway, these tiny marine creatures were the biggest and most abundant forms of life on the planet back then. As organisms of this sort do, they absorbed energy from the sun and stored it inside themselves as carbon molecules. When they died, they would drop to the bottom of whatever body of water they lived in, slowly getting buried by sand, silt and gravel over time. The planet was covered with these creatures who would do that over millions of years: live, create carbon, die, get buried.

Over time (a LOT of time), these carbon-rich remains got buried deeper and deeper underground as the Earth’s geography shifted and changed. As the remains were crushed by more and more material, the intense pressure, lack of oxygen and heat began to change their chemical makeup. 

Depending on the amount of each factor, different types of fossil fuels were formed! More heat usually resulted in transforming the remains into a natural gas, while lower temperatures would result in coal. Oil is a liquid form of fossil fuel that was made with its own specific combination of heat and pressure.

When we understand that fossil fuels come from the remains of ancient marine organisms, it makes sense that Texas is a hotspot for fossil fuel reserves. The Texas area used to be a drainage area for major rivers and streams back in the ancient times, just as the Gulf of Mexico is now! Sediment traveled into the drainage over the course of millions of years, all being deposited on the drainage floor where Texas is now. 

Early oil industry

A few million years later, humans began digging into the earth’s crust. Here in Texas where the oil reserves are located fairly close to the surface (as compared to, say, Russia), it wasn’t too hard for people to discover the presence of the sticky black liquid. Native Americans encountered the substance seeping from the ground and believed that it held medicinal value, while early European settlers used it to seal their boats. 

Later in the mid-1800s, people began to establish cattle ranches, farms and homesteads in Texas’ flat expanse. It was here that farmers began to raise concerns about the oil, as it would seep into their wells and contaminate their drinking water. 

These farmers soon began to drill for oil on their now valuable land, and oil fields began popping up all over Texas. The first oil field to strike gold (black gold) and really get rich was a field in Corsicana in 1894, and it was all discovered by a man just trying to dig a water well!


The discovery of oil on Spindletop Hill near Beaumont, Texas marked a turning point in the Texas oil industry. The Gladys City Oil, Gas and Manufacturing Company had been drilling unsuccessfully for two years in the region before finally striking oil on January 10, 1901. A geyser of oil practically exploded from the ground, reaching a height of 150 feet and was considered to be the most impressive and most powerful oil fountain in the world at the time.

The “gusher” produced around 100,000 barrels of oil a day and drew in oil companies from around the nation and the world. Spindletop cemented Texas as a prime location for oil, and the sheer amount and availability of oil caused oil prices to drop to a record 3 cents per barrel. 

Automobile industry

The rise of the automobile industry in the United States increased the demand for petroleum worldwide, especially after Henry Ford made automobiles more accessible to the middle-class in the early 1900s. After the U.S. economic boom in the 1920s, demand increased even more.  

Texas Company

By this point, Beaumont was no longer the center of oil activity. Many other oil fields hit geysers of their own, and cities were racing to establish themselves as the center of the industry. 

One of the largest companies in the industry was the Texas Company, known today as Texaco. Real estate tycoon Jesse Jones offered head of the Texas Company, Joseph Cullinan, a brand new office building in downtown Houston for $2,000 a month, hoping that the oil company would draw other businesses to the area, too. Cullinan moved the Texas Company to Houston and, as Jones predicted, other oil companies followed. 

The Houston Ship Channel

Houston continued to prove itself as the center of the oil industry in the early years of the 20th century. One of the largest draws was the city’s proximity to the Gulf of Mexico and its access to railroads. To further improve business prospects, the city designed a shipping channel that made it far easier for commercial shipping both in and out of the city. In 1914 the Houston Ship Channel opened for business, and the rest is history!

Houston today

Of course, there is so much more to Houston’s oil industry than this short timeline of events. But whether you’re an oil expert, a local history buff or simply curious, there’s no denying how the presence of oil created the city we have today. 


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Featured photo courtesy Pixabay/jp26jp

Author of Article

Colleen Ford is a South African who now lives in Spokane, Washington. She loves to travel, camp (in warm weather) and bake.

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