Oil in Texas

Topics: Peak oil, Benchmark, 1980s oil glut Pages: 4 (1563 words) Published: December 30, 2011
How did the national demand for oil affect the local businesses in Texas, and how did Texas oil discoveries affect the national oil market? As the Texas oil industry grew, so did related industries. Some companies began producing oil by-products such as petrochemicals. Others produced pipelines, barrels, and oil-field equipment. As these companies began moving into oil towns such as Houston, Beaumont, and Port Arthur, they further expanded the local economies. Some moved into small towns, quickly turning them into cities. In North Texas the town of Wichita Falls grew from 8,200 residents in 1910 to about 40,000 in 1920.The state income also increased from just over $101,000 in 1906 to $5.9 million in 1929, largely due to the oil industry. Despite the growth in oil and other industries during the 1920s, agriculture remained the leading economic force in Texas. World War I and the expansion of cities increased the demand for farm products. By the end of the 1920s, the value of agricultural products was three times that of oil. Cotton, rice, wheat, citrus fruit, and corn production all grew. Unfortunately for farmers, major increases in crop production led to a sharp decline in prices. Many farmers refused to slow down production. In fact, farmers produced even more to keep their income at the same level. This made prices drop further. Some farmers formed farmers’ organizations to pool their crops and negotiate better prices. Others learned to use machines to produce goods faster and more efficiently. Every business provides a good or service to a consumer or another business. The supply and demand of the good or service affects the revenue attainable from the market. When petroleum companies increase the cost of fuel because of limited supply, it affects businesses globally and locally. When oil costs increase, transportation companies have increased operational costs. Part of this cost is passed on to its customers in the form of higher delivery...
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