Wednesday, January 10, 2018

The Gusher that Changed the World —Spindletop

The Lucas Gusher at /spindletop Hill south of /Beaumont, Texas in 1901.  Photo by John Trost.
On January 10, 1901 after almost nine years of poking useless holes into a salt dome formation near Beaumont, Texas in the southeast corner of the state near the Louisiana line and Gulf Coast some nearly busted and discouraged wildcatters watched in amazement as oil geysered 150 feet in the air from a well head at a rate of 100,000 barrels per day. It took nine days before the well was brought under control.  When the well began pumping instead of spewing an oil boom was set off around the Gulf Coast, an industry was disrupted and transformed, and the door was opened to the age of the automobile for better or for worse.
The petroleum industry got its start in 1859 when Colonel Edwin L. Drake struck rock oil at Titusville, Pennsylvania.  It grew rapidly after the Civil War based on demand for a replacement of whale oil as a lamp fuel—coal oil or kerosene—lubricants for the railroads and other rapidly expanding industries, and eventually as a heating fuel.  Oil quickly became one of the most valuable commodities in the U.S.

A ruthless genius, John D. Rockefeller worked his way up from an assistant clerk to the world's first billionaire by creating  the first all-compassing Trust, Standard Oil.  He gleefully ruined competitors and ran roughshod over the law eventually raising public outrage to a fever pitch.  Late in life he sought to transform his personal image through ostentatious philanthropy.

By the late 1870 John D. Rockefeller and his partners dominated the oil industry via a spider web of companies centered on his Standard Oil of Ohio.  In 1882 those companies were consolidated into the nation’s first all-powerful Trust under the holding company, Standard Oil of New Jersey.  It controlled virtually all production, distribution, and sales of oil products and quickly used its power to ruthlessly destroy upstart competitors, drive prices high, and evade state laws intended to regulate it. 
Public outrage, spurred by the work of muckraking journalists, led to the passage of the Sherman Anti-Trust Act which regulated or outlawed many of Standard Oil’s business practices illegal under Federal Law.  Under siege, legions of lawyers fought enforcement for years.  It was not until 1911 that the courts finally ordered the break-up of Standard Oil into regional companies.
Meanwhile production in Pennsylvania peaked around 1890.  Exploration led to new fields, but satisfied with the high prices of restricted supply Standard officials were slow to expand exploration to the West and South.  Even if they had wanted to, its business practices had so stirred up Populist resentment in the Midwest and West.  Sentiment was riding so high against the company that Texas barred Standard Oil from operating in the state in 1900.  The door was ajar.
Everyone knew there was oil around the Gulf where it bubbled to the surface in several areas on land, in swampy bayous, and even in Gulf watersNative Americans had long used it as a salve and medicineHuckster showmen were mixing it with alcohol and sometime cocaine to peddle by the bottle as patent medicine.  The trick was finding ways to extract the oil in quantity economically enough to compete with Standard Oil.
Enter the wildcatters who took their name from the Wildcat banks of the Jacksonian Era which fraudulently issued banknotes with little or no capital to back them up.  Similarly independent oil speculators formed companies, sold stock, and borrowed money to finance their operations.  The vast majority of the wildcatters went bankrupt, often multiple times taking down their investors and creditors with them.
One armed wildcatter Pattillo Higgins was a colorful scoundrel of a different sort--founder of fly-by-night-companies and a former cop killer.

In August 1892, George W. O’Brien, George W. Carroll, Pattillo Higgins and others formed the Gladys City Oil, Gas, and Manufacturing Company to drill on Spindletop Hill. They sunk nothing but dry holes and were soon being hounded by irate investors.  Money dried up.  Higgins, a one armed rascal—he had lost the arm in a shootout with a deputy sheriff which left the lawman dead after trying to torch a Black Baptist church—left the group and sought new backers and partners.  A he found Croatian born Capt. Anthony F. Lucas, an expert in salt domes who agreed with his assessment that there was oil under the hill.  In 1899 the new partners began to drill again, but the light equipment Lucas used collapsed when they reached a depth of 575.  So did their their credit.
Instead Lucas cut a new deal for backing with Pittsburgh investors James M. Guffey, who held and controlled funds, and John H. Galey that left him with a minority stake and cut out Higgins entirely.  Lucas resumed drilling in October 1900 with an experienced crew. 

Higgins's erstwhile partner, Serbian born engineer Antthony F. Lucas a/k/a Antun Lucic brought in the gusher at Spindletop named for him but was soon forced out by his Eastern banker partners.

It was a difficult drill through unsteady sand but on January 10 the crew of roughnecks was sent scurrying for their lives as a six ton, four-inch drilling pipe shot out of the hole.  Officially named Lucas #1 but usually called the Lucas gusher, the success of the well set off a stampede of exploration on Spindletop which rapidly spread to other Gulf sites in Texas and Louisiana.  The Oil Boom was on.
The single well produced around 100,000 barrels a day. The population of Beaumont mushroomed from 8,000 to 60,000 within a year. By 1902 285 wells were operating on Spindletop Hill and over 600 oil companies had been chartered. Lucas, a minority partner, did not share in the bonanza of wealth produced by the well.  He was forced out of the company leaving it in the hands of the Eastern investors by the end of the year.
Higgins for his part sued Lucas and his former partners claiming that he still held the valid lease on the mineral rights of the well.  The complicated case dragged out in the courts but in 1903 Higgins was essentially paid off with $3 million to go away.  He went on to found other oil companies, usually quarreling with his partners and leaving before the wells could produce much revenue. 
The Oil Boom came at an auspicious moment.  It assured what seemed like unlimited supplies of cheap oil just as the infant automobile industry was about to take off.  Heretofore scores of small companies had been founded the most successful of which hand built a dozen or so cars a year for sale to the rich in search of new toys and ways to display their wealth.  But the matter of how automobiles would be powered was far from settled.  Several companies were producing battery powered electric cars and steam still looked like a viable option.  The prospect of cheap gasoline tipped the scales to internal combustion engines.
In 1903 the Curved Dash Olds became the first successfully mass marketed car.  Soon several companies with familiar names were turning out luxury cars—Cadillac, Packard, and Buick among them.  Henry Ford entered the market with his inexpensive assembly line produced Model T in 1908 which put motoring within the reach of the middle class and within a few years even blue collar workers.  By 1920 millions of vehicles were on the road, city streets were being paved, and a haphazard web of interconnecting highways was being developed.  America was on wheels and powered by gasoline.

Just 18 months after the Lucas strike, Spindletop Hill was a forest of derricks operated by dozens of wildcatters and speculative companies.  Within five years almost all would be absorbed into powerful new petroleum companies competing with Standard Oil

All of the wealth produced by this boom was not destined to stay in the hands of small time operators like Higgins and Lucas and the others that followed them to Spindletop and to a succession of oil boom towns from Tampico in Mexico to the Texas interior and Oklahoma up to Wyoming and out in California.  Sometimes led by an astute oil man but more frequently by bankers and Wall Street investors the small firms were gobbled up and linked to refineries and distribution systems.  Out of Spindletop and surrounding oil fields Gulf Oil and Texaco were formed and were soon competing with Standard Oil and after the Federal break-up its still powerful regional descendents.  In post World War I America branded gas stations became a national fixture.
The story of Spindletop also influenced pop culture.  The 1940 MGM classic Boom Town starring Clark Gable, Spencer Tracy, Claudette Colbert, Heddy Lamarr, and Frank Morgan was largely inspired by Higgins and Lucas.  Edna Ferber’s novel Giant and the 1956 Warner Bros. epic movie starring Rock Hudson, Elizabeth Taylor, and James Dean partially modeled the bitter and jealous character Jeff Rinks on Higgins.  More recently the Academy Award winning 2008 film There Will Be Blood based on Upton Sinclair’s muckraking novel Oil! Starring Daniel Day Lewis also drew inspiration from Spindletop.

A model of the oriinal derrick and a Lone Star topped obelisk monument to Lucas are te central attractions of the Spindletop Gladys City Boomtown Museum in Beaumont.

Lucas Gusher Monument is a nearly 60 foot tall obelisk topped by a Texas Lone Star  was erected at the site of the original well head in 1941.  In 1977 it was moved to the Spindletop Gladys City Boomtown Museum in Beaumont near a reproduction of the original oil derrick.  Today a flag pole marks the original well.

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