1 00:00:00,120 --> 00:00:02,429 Previously on The Disconnect. 2 00:00:02,430 --> 00:00:03,569 Really? 3 00:00:03,570 --> 00:00:05,909 We had what they called our fever 4 00:00:05,910 --> 00:00:06,539 here. 5 00:00:06,540 --> 00:00:08,369 Instead of having a 6 00:00:08,370 --> 00:00:10,469 cabal of big oil companies 7 00:00:10,470 --> 00:00:12,569 develop at East Texas field. 8 00:00:12,570 --> 00:00:14,249 You had farmers doing it. 9 00:00:14,250 --> 00:00:15,989 Small independent operators kept 10 00:00:15,990 --> 00:00:17,879 drilling and the price of oil 11 00:00:17,880 --> 00:00:19,259 kept plummeting. 12 00:00:19,260 --> 00:00:20,699 Now it's just unsustainable. 13 00:00:20,700 --> 00:00:21,809 The idea was that lowering 14 00:00:21,810 --> 00:00:24,269 production would stabilize prices. 15 00:00:24,270 --> 00:00:26,099 That's when Governor Ross Sterling 16 00:00:26,100 --> 00:00:27,839 declared martial law. 17 00:00:27,840 --> 00:00:29,789 Sterling sent two Ranger captains 18 00:00:29,790 --> 00:00:31,799 and about 1100 National Guards 19 00:00:31,800 --> 00:00:33,779 who turn off the pumps to turn off 20 00:00:33,780 --> 00:00:35,819 the oil rigs, shut everything down. 21 00:00:42,590 --> 00:00:44,719 So when we left off last time, 22 00:00:44,720 --> 00:00:46,969 East Texas was in 23 00:00:46,970 --> 00:00:48,259 revolt. 24 00:00:48,260 --> 00:00:50,479 Small time oil drillers were 25 00:00:50,480 --> 00:00:51,889 upset about the government coming in 26 00:00:51,890 --> 00:00:53,569 to try to control their business. 27 00:00:53,570 --> 00:00:56,029 The battle pitted big 28 00:00:56,030 --> 00:00:58,009 oil companies on one side against 29 00:00:58,010 --> 00:01:00,259 these small time Texas. 30 00:01:00,260 --> 00:01:01,939 You know what they sometimes call 31 00:01:01,940 --> 00:01:03,439 wildcatters? You know, old school 32 00:01:03,440 --> 00:01:05,329 Texas oil men on the other 33 00:01:05,330 --> 00:01:06,319 side. 34 00:01:06,320 --> 00:01:08,149 Now, what happens 35 00:01:08,150 --> 00:01:10,039 next will set Texas 36 00:01:10,040 --> 00:01:11,989 on a course of global 37 00:01:11,990 --> 00:01:13,729 energy dominance. 38 00:01:13,730 --> 00:01:15,589 It was regulated by the state 39 00:01:15,590 --> 00:01:17,599 of Texas because that's where the 40 00:01:17,600 --> 00:01:19,099 oil was coming from. 41 00:01:19,100 --> 00:01:20,959 It'll help defeat fascism and World 42 00:01:20,960 --> 00:01:21,559 War Two. 43 00:01:21,560 --> 00:01:23,449 Today, oil is the most 44 00:01:23,450 --> 00:01:25,219 precious single substance the Earth 45 00:01:25,220 --> 00:01:25,999 produces. 46 00:01:26,000 --> 00:01:27,979 And ultimately 47 00:01:27,980 --> 00:01:30,079 it will give rise to a new 48 00:01:30,080 --> 00:01:32,149 global cartel that still 49 00:01:32,150 --> 00:01:33,709 calls the shots today. 50 00:01:33,710 --> 00:01:35,809 The glory days of the Railroad 51 00:01:35,810 --> 00:01:38,599 Commission ended in 1972. 52 00:01:40,930 --> 00:01:41,930 I Mose Buchele. 53 00:01:42,340 --> 00:01:43,449 This is the disconnect. 54 00:01:43,450 --> 00:01:45,369 Power, politics and 55 00:01:45,370 --> 00:01:46,370 the Texas blackout. 56 00:01:51,380 --> 00:01:53,089 So today we pick the story back up 57 00:01:53,090 --> 00:01:54,919 as National Guard troops are 58 00:01:54,920 --> 00:01:57,139 sent into East Texas 59 00:01:57,140 --> 00:01:59,149 to confront these rogue oil 60 00:01:59,150 --> 00:02:00,679 men who are opposed to government 61 00:02:00,680 --> 00:02:01,699 control. 62 00:02:01,700 --> 00:02:03,619 And again, joining me to help tell 63 00:02:03,620 --> 00:02:05,869 this story is Audrey McGlinchey. 64 00:02:05,870 --> 00:02:06,499 Hey, Audrey. 65 00:02:06,500 --> 00:02:07,669 Hey, Mose. 66 00:02:07,670 --> 00:02:09,589 So you were just saying that the 67 00:02:09,590 --> 00:02:10,909 governor declared martial law and 68 00:02:10,910 --> 00:02:13,609 sent all these troops to East Texas? 69 00:02:13,610 --> 00:02:15,109 What did the people there think of 70 00:02:15,110 --> 00:02:15,709 this? 71 00:02:15,710 --> 00:02:17,330 Not very highly. 72 00:02:18,560 --> 00:02:19,459 They didn't like it. 73 00:02:19,460 --> 00:02:20,689 They did not like it. 74 00:02:20,690 --> 00:02:21,949 And they didn't like it for a bunch 75 00:02:21,950 --> 00:02:23,779 of reasons. But one of them was 76 00:02:23,780 --> 00:02:25,579 that the Texas governor at the time, 77 00:02:25,580 --> 00:02:28,009 this guy, Ross Sterling, was himself 78 00:02:28,010 --> 00:02:29,899 one of the founders of a big 79 00:02:29,900 --> 00:02:31,879 Texas oil company called Humble 80 00:02:31,880 --> 00:02:34,129 Oil, which was actually 81 00:02:34,130 --> 00:02:36,589 kind of a local subsidiary 82 00:02:36,590 --> 00:02:38,689 of the company, Standard Oil, 83 00:02:38,690 --> 00:02:39,829 you know, which we heard about last 84 00:02:39,830 --> 00:02:41,029 episode is called was called The 85 00:02:41,030 --> 00:02:43,039 Octopus, this big bad oil 86 00:02:43,040 --> 00:02:44,209 company that the people in East 87 00:02:44,210 --> 00:02:45,319 Texas didn't like. 88 00:02:45,320 --> 00:02:47,329 So this is a fact that did not help 89 00:02:47,330 --> 00:02:49,159 Ross Sterling kind of win the hearts 90 00:02:49,160 --> 00:02:51,079 and minds of East Texas 91 00:02:51,080 --> 00:02:52,639 oil workers and independent 92 00:02:52,640 --> 00:02:54,409 producers when he sent in the 93 00:02:54,410 --> 00:02:55,159 National Guard. 94 00:02:55,160 --> 00:02:56,809 And Sterling chose Brigadier General 95 00:02:56,810 --> 00:02:58,519 Jacob Walters to put down the 96 00:02:58,520 --> 00:03:00,439 so-called insurrection 97 00:03:00,440 --> 00:03:01,249 in civilian life. 98 00:03:01,250 --> 00:03:03,199 Walters was a lawyer for Texaco 99 00:03:03,200 --> 00:03:04,459 in Houston. 100 00:03:04,460 --> 00:03:06,199 So another connection to those big 101 00:03:06,200 --> 00:03:08,089 oil producers, the fact that, 102 00:03:08,090 --> 00:03:09,859 again, made the small time oil 103 00:03:09,860 --> 00:03:11,569 drillers pretty angry. 104 00:03:11,570 --> 00:03:12,589 Absolutely. 105 00:03:12,590 --> 00:03:14,569 But Walters was more than 106 00:03:14,570 --> 00:03:15,469 just a lawyer. 107 00:03:15,470 --> 00:03:17,539 He did have some experience 108 00:03:17,540 --> 00:03:18,529 doing this sort of thing as a 109 00:03:18,530 --> 00:03:19,459 National Guard leader. 110 00:03:19,460 --> 00:03:20,779 He'd also been sent to establish 111 00:03:20,780 --> 00:03:22,759 order in other oil boomtowns. 112 00:03:22,760 --> 00:03:23,959 Yeah, In fact, he was so well known 113 00:03:23,960 --> 00:03:25,789 for that. He actually wrote a book 114 00:03:25,790 --> 00:03:27,259 about martial law. 115 00:03:27,260 --> 00:03:28,789 Kind of, I guess, like a how to 116 00:03:28,790 --> 00:03:30,829 manual, how to do martial law. 117 00:03:30,830 --> 00:03:32,569 So so this guy knew what he was 118 00:03:32,570 --> 00:03:34,999 doing, but in East Texas, 119 00:03:35,000 --> 00:03:36,169 they were ready for him. 120 00:03:36,170 --> 00:03:38,809 Many small producers began laying 121 00:03:38,810 --> 00:03:40,459 their own pipelines. 122 00:03:40,460 --> 00:03:42,739 Here's Page Foshee again, Landman, 123 00:03:42,740 --> 00:03:43,909 and oil historian. 124 00:03:43,910 --> 00:03:45,769 Crisscrossing the area 125 00:03:45,770 --> 00:03:47,599 and getting them to refineries that 126 00:03:47,600 --> 00:03:49,489 would accept their oil. 127 00:03:49,490 --> 00:03:51,099 And there was plenty of it flowing. 128 00:03:51,100 --> 00:03:53,119 A bunch of steel pipes under 129 00:03:53,120 --> 00:03:54,979 the surface, the East Texas field. 130 00:03:54,980 --> 00:03:56,599 These Texas guys came up with 131 00:03:56,600 --> 00:03:58,879 ingenious ways of evading detection. 132 00:03:58,880 --> 00:04:00,739 They built fake houses around oil 133 00:04:00,740 --> 00:04:02,779 wells, set up field refineries, 134 00:04:02,780 --> 00:04:04,609 kind of like whiskey stills in hard 135 00:04:04,610 --> 00:04:06,109 to reach places. 136 00:04:06,110 --> 00:04:07,759 They even installed hidden bypass 137 00:04:07,760 --> 00:04:09,739 valves to secretly divert oil 138 00:04:09,740 --> 00:04:11,029 to storage tanks. 139 00:04:11,030 --> 00:04:13,189 That oil sometimes moved by truck, 140 00:04:13,190 --> 00:04:15,049 train or secret pipeline out of the 141 00:04:15,050 --> 00:04:17,119 area and often 142 00:04:17,120 --> 00:04:17,909 out of the state. 143 00:04:17,910 --> 00:04:20,179 Back we we haul a lot of oil. 144 00:04:20,180 --> 00:04:21,859 This is Joe Kinsey, whose interview 145 00:04:21,860 --> 00:04:23,239 can also be found at the oral 146 00:04:23,240 --> 00:04:24,739 history collection at Steven F 147 00:04:24,740 --> 00:04:25,939 Austin University. 148 00:04:25,940 --> 00:04:27,799 He worked as a hot oil smuggler in 149 00:04:27,800 --> 00:04:29,179 1931. 150 00:04:29,180 --> 00:04:31,159 They little little refinery. 151 00:04:31,160 --> 00:04:32,929 They paid cash for the oil when it 152 00:04:32,930 --> 00:04:34,279 came in. 153 00:04:34,280 --> 00:04:36,499 They sold the gasoline for cash. 154 00:04:36,500 --> 00:04:38,449 There's no record made. 155 00:04:38,450 --> 00:04:39,529 This was the system. 156 00:04:39,530 --> 00:04:41,389 The National Guard was sent in to 157 00:04:41,390 --> 00:04:42,619 shut down. 158 00:04:42,620 --> 00:04:44,749 And when they came in, things 159 00:04:44,750 --> 00:04:46,939 turned violent fast. 160 00:04:46,940 --> 00:04:48,589 Within days of the troops arriving, 161 00:04:48,590 --> 00:04:50,809 arsonists started burning buildings. 162 00:04:50,810 --> 00:04:52,519 Remember those churches where the 163 00:04:52,520 --> 00:04:54,769 Texas Ranger, Lone Wolf Gonzalez, 164 00:04:54,770 --> 00:04:55,739 kept his prisoners? 165 00:04:55,740 --> 00:04:57,499 They call them trot line churches 166 00:04:57,500 --> 00:04:58,879 because they hid the prisoners in 167 00:04:58,880 --> 00:04:59,539 the church. 168 00:04:59,540 --> 00:05:00,889 This is Helen Griffin again. 169 00:05:00,890 --> 00:05:02,119 We heard from her in the first 170 00:05:02,120 --> 00:05:02,989 episode. 171 00:05:02,990 --> 00:05:05,029 And soon after, the 172 00:05:05,030 --> 00:05:05,899 arsonists. 173 00:05:05,900 --> 00:05:07,729 And we assume that they were 174 00:05:07,730 --> 00:05:08,730 boomers 175 00:05:09,800 --> 00:05:11,899 set fire to all the three 176 00:05:11,900 --> 00:05:13,819 main churches and burn them to 177 00:05:13,820 --> 00:05:14,869 the ground. 178 00:05:14,870 --> 00:05:17,089 On one night, Helen 179 00:05:17,090 --> 00:05:18,949 blamed disgruntled oil workers. 180 00:05:18,950 --> 00:05:21,079 Local police, maybe improbably 181 00:05:21,080 --> 00:05:23,239 blamed communist agitators, 182 00:05:23,240 --> 00:05:25,459 and other people suggested the fires 183 00:05:25,460 --> 00:05:27,619 were themselves set by pro 184 00:05:27,620 --> 00:05:29,539 regulation forces 185 00:05:29,540 --> 00:05:31,459 as a kind of a false flag 186 00:05:31,460 --> 00:05:33,349 to justify the martial law. 187 00:05:33,350 --> 00:05:34,849 Whatever was really going on, the 188 00:05:34,850 --> 00:05:36,769 arsons ended the use of the, quote, 189 00:05:36,770 --> 00:05:38,719 trot line churches and 190 00:05:38,720 --> 00:05:40,819 left locals with nowhere to pray. 191 00:05:40,820 --> 00:05:42,379 They had to have church in the city 192 00:05:42,380 --> 00:05:44,629 hall as well as their 193 00:05:44,630 --> 00:05:46,509 baptismal and all of it from 194 00:05:46,510 --> 00:05:47,510 the city hall 195 00:05:48,020 --> 00:05:49,039 You know, hearing about this now, 196 00:05:49,040 --> 00:05:50,929 you've got to wonder if martial law 197 00:05:50,930 --> 00:05:52,699 might have actually increased the 198 00:05:52,700 --> 00:05:53,599 criminality. Right? 199 00:05:53,600 --> 00:05:56,119 It created this massive black market 200 00:05:56,120 --> 00:05:57,349 for hot oil. 201 00:05:57,350 --> 00:05:59,179 And that meant that thievery, 202 00:05:59,180 --> 00:06:01,129 extortion, bribery, all these things 203 00:06:01,130 --> 00:06:02,989 could kind of flourish around 204 00:06:02,990 --> 00:06:03,889 this black market. 205 00:06:03,890 --> 00:06:05,629 And really, there was no way for the 206 00:06:05,630 --> 00:06:08,269 victims to report the crimes 207 00:06:08,270 --> 00:06:10,129 without implicating themselves. 208 00:06:10,130 --> 00:06:11,209 And I think it's important to add 209 00:06:11,210 --> 00:06:12,739 that while the big oil companies 210 00:06:12,740 --> 00:06:15,169 publicly opposed oil smuggling, 211 00:06:15,170 --> 00:06:16,939 they were active producers and 212 00:06:16,940 --> 00:06:19,009 especially purchasers of hot oil 213 00:06:19,010 --> 00:06:19,909 themselves. 214 00:06:19,910 --> 00:06:21,079 Yeah, I mean, after all, was just 215 00:06:21,080 --> 00:06:22,069 really cheap. 216 00:06:22,070 --> 00:06:23,359 Yeah, it makes sense. 217 00:06:25,350 --> 00:06:27,419 So as martial law continued, 218 00:06:27,420 --> 00:06:29,639 oil producers attacked each other. 219 00:06:29,640 --> 00:06:31,229 People dynamited oil wells. 220 00:06:31,230 --> 00:06:32,699 People took pot shots at state 221 00:06:32,700 --> 00:06:33,869 troopers. 222 00:06:33,870 --> 00:06:35,789 Gunfights were breaking out in one 223 00:06:35,790 --> 00:06:37,229 of the most serious ones, gunmen 224 00:06:37,230 --> 00:06:39,179 clashed with troops at a National 225 00:06:39,180 --> 00:06:39,959 Guard checkpoint. 226 00:06:39,960 --> 00:06:41,549 The gunmen were then able to escape 227 00:06:41,550 --> 00:06:42,269 into the woods. 228 00:06:42,270 --> 00:06:44,159 The best thing that East Texas had 229 00:06:44,160 --> 00:06:46,049 going for it, at least 230 00:06:46,050 --> 00:06:48,179 East Texas, is scofflaws were 231 00:06:48,180 --> 00:06:49,109 the Pine Trees. 232 00:06:49,110 --> 00:06:50,759 State troopers and regulators seemed 233 00:06:50,760 --> 00:06:52,529 completely helpless. 234 00:06:52,530 --> 00:06:54,539 Decades later, former Texas 235 00:06:54,540 --> 00:06:56,369 Senator Ralph Yarborough 236 00:06:56,370 --> 00:06:57,629 remembered visiting the East Texas 237 00:06:57,630 --> 00:06:59,219 field as a young assistant attorney 238 00:06:59,220 --> 00:07:00,220 general 239 00:07:01,409 --> 00:07:02,339 who went over there to help. Build some of this railroad 240 00:07:02,340 --> 00:07:04,018 commission, had National Guard. 241 00:07:04,019 --> 00:07:04,349 Out. 242 00:07:04,350 --> 00:07:05,759 Researcher David Prindle interviewed 243 00:07:05,760 --> 00:07:07,949 Yarborough back in the 1970s 244 00:07:07,950 --> 00:07:08,999 and told me the problem is. 245 00:07:09,000 --> 00:07:10,499 Running hot oil. 246 00:07:10,500 --> 00:07:11,879 What he's saying is that he went out 247 00:07:11,880 --> 00:07:13,469 to an oil field and started talking 248 00:07:13,470 --> 00:07:15,329 to one local guy who was running 249 00:07:15,330 --> 00:07:17,279 hot oil, and this guy 250 00:07:17,280 --> 00:07:19,169 was laughing about how clueless the 251 00:07:19,170 --> 00:07:20,459 Railroad Commission and National 252 00:07:20,460 --> 00:07:21,239 Guardsmen, were 253 00:07:21,240 --> 00:07:22,709 They didn't do anything with them 254 00:07:22,710 --> 00:07:24,659 around. And then it's nice to have 255 00:07:24,660 --> 00:07:25,829 them around. It looks like they're 256 00:07:25,830 --> 00:07:27,179 enforcing the law and you're not 257 00:07:27,180 --> 00:07:28,180 questioned. 258 00:07:29,880 --> 00:07:31,860 It was it was an interesting time. 259 00:07:33,390 --> 00:07:34,799 While all this was going on. 260 00:07:34,800 --> 00:07:36,029 There were other types of fights 261 00:07:36,030 --> 00:07:38,189 over oil field regulations 262 00:07:38,190 --> 00:07:39,599 playing out in courtrooms and 263 00:07:39,600 --> 00:07:41,279 legislatures in Austin and 264 00:07:41,280 --> 00:07:42,479 Washington. 265 00:07:42,480 --> 00:07:44,339 At times, it wasn't even clear 266 00:07:44,340 --> 00:07:46,319 whether the rules the National 267 00:07:46,320 --> 00:07:48,239 Guard was imposing were 268 00:07:48,240 --> 00:07:50,909 themselves legal, or even 269 00:07:50,910 --> 00:07:52,799 if the National Guard's presence 270 00:07:52,800 --> 00:07:54,959 in East Texas was legal. 271 00:07:54,960 --> 00:07:56,939 And it turns out it wasn't. 272 00:07:56,940 --> 00:07:58,889 In December of 1932, the U.S. 273 00:07:58,890 --> 00:08:00,629 Supreme Court ruled that the martial 274 00:08:00,630 --> 00:08:03,329 law orders were invalid. 275 00:08:03,330 --> 00:08:05,219 Jacob Walters left East Texas 276 00:08:05,220 --> 00:08:06,779 and he gave oversight of the oil 277 00:08:06,780 --> 00:08:08,219 field to the Texas Railroad 278 00:08:08,220 --> 00:08:10,139 Commissioner, Ernest Thompson. 279 00:08:10,140 --> 00:08:11,069 So this is how it was. 280 00:08:11,070 --> 00:08:12,419 The Railroad Commission, you know, 281 00:08:12,420 --> 00:08:14,309 an agency that was originally 282 00:08:14,310 --> 00:08:16,469 formed to regulate trains 283 00:08:16,470 --> 00:08:18,419 now running the basically 284 00:08:18,420 --> 00:08:20,849 the occupation of this rogue 285 00:08:20,850 --> 00:08:22,259 oil field. 286 00:08:22,260 --> 00:08:23,669 Walters had set up his National 287 00:08:23,670 --> 00:08:25,679 Guard headquarters on a hill outside 288 00:08:25,680 --> 00:08:26,879 of Kilgore. 289 00:08:26,880 --> 00:08:28,739 In the book The Last Boom, there's 290 00:08:28,740 --> 00:08:30,329 a description of the moment when 291 00:08:30,330 --> 00:08:33,599 Thompson arrives to take command. 292 00:08:33,600 --> 00:08:34,859 Do you have a name for your 293 00:08:34,860 --> 00:08:35,759 headquarters? 294 00:08:35,760 --> 00:08:38,399 Thompson is said to have asked. 295 00:08:38,400 --> 00:08:40,469 I thought of naming it, Hell replied 296 00:08:40,470 --> 00:08:41,548 Walters. 297 00:08:41,549 --> 00:08:43,499 If you have no objection, sir, 298 00:08:43,500 --> 00:08:46,348 I'll call it proration, Hill. 299 00:08:46,349 --> 00:08:46,712 said Thompson. 300 00:08:46,713 --> 00:08:48,659 They both mean the same thing. 301 00:08:52,530 --> 00:08:53,879 But right as the commission began to 302 00:08:53,880 --> 00:08:55,979 claim full authority over the oil 303 00:08:55,980 --> 00:08:58,139 field, there would be one more 304 00:08:58,140 --> 00:08:59,159 bloody fight 305 00:09:00,971 --> 00:09:02,219 In Austin small independent producers 306 00:09:02,220 --> 00:09:03,989 had been lobbying lawmakers since 307 00:09:03,990 --> 00:09:05,849 martial law was declared they wanted 308 00:09:05,850 --> 00:09:07,889 to remove the Railroad Commission's 309 00:09:07,890 --> 00:09:09,809 authority over the Texas oil 310 00:09:09,810 --> 00:09:11,579 fields. They wanted production 311 00:09:11,580 --> 00:09:12,839 limits gone. 312 00:09:12,840 --> 00:09:14,639 This was getting a ton of attention 313 00:09:14,640 --> 00:09:16,499 from all over the country. 314 00:09:16,500 --> 00:09:17,849 Ralph Yarborough, the young 315 00:09:17,850 --> 00:09:19,469 assistant attorney general, later 316 00:09:19,470 --> 00:09:21,449 remembered how Austin was crawling 317 00:09:21,450 --> 00:09:23,399 with undercover agents. 318 00:09:23,400 --> 00:09:24,299 Undercover agents. 319 00:09:24,300 --> 00:09:25,109 From whom? 320 00:09:25,110 --> 00:09:26,609 Well, they were undercover agents 321 00:09:26,610 --> 00:09:27,929 from Maine. 322 00:09:27,930 --> 00:09:29,669 And the local he knew. 323 00:09:29,670 --> 00:09:31,349 From everybody everywhere had his 324 00:09:31,350 --> 00:09:32,759 own intelligence file. 325 00:09:32,760 --> 00:09:34,329 You didn't have any CIA then? 326 00:09:34,330 --> 00:09:35,669 The remember, 1931. 327 00:09:35,670 --> 00:09:37,789 And the FBI was one might 328 00:09:37,790 --> 00:09:38,759 know. 329 00:09:38,760 --> 00:09:39,779 Opponents of the Railroad 330 00:09:39,780 --> 00:09:41,759 Commission, including a lot of 331 00:09:41,760 --> 00:09:43,709 these small time independent 332 00:09:43,710 --> 00:09:45,869 oilmen, finally got a bill 333 00:09:45,870 --> 00:09:47,759 before the state legislature to 334 00:09:47,760 --> 00:09:49,769 gut the commission's authority 335 00:09:49,770 --> 00:09:51,719 and create a new agency to 336 00:09:51,720 --> 00:09:52,499 regulate oil. 337 00:09:52,500 --> 00:09:53,939 It would be an appointed board that 338 00:09:53,940 --> 00:09:55,529 small time drillers thought would be 339 00:09:55,530 --> 00:09:57,269 more on their side. 340 00:09:57,270 --> 00:10:00,869 So on April 24th, 1933, 341 00:10:00,870 --> 00:10:01,979 Railroad Commissioner Ernest 342 00:10:01,980 --> 00:10:03,839 Thompson returned 343 00:10:03,840 --> 00:10:05,669 to Austin from that proration 344 00:10:05,670 --> 00:10:08,099 hill to be present for the vote. 345 00:10:08,100 --> 00:10:09,749 He did not have high hopes the very 346 00:10:09,750 --> 00:10:11,759 day he arrived, the Texas House 347 00:10:11,760 --> 00:10:13,499 that approved the measure, and the 348 00:10:13,500 --> 00:10:14,969 next day it would head to the 349 00:10:14,970 --> 00:10:15,749 Senate. 350 00:10:15,750 --> 00:10:17,219 Former Railroad Commissioner Kent 351 00:10:17,220 --> 00:10:19,349 Hance picks up the story from there. 352 00:10:19,350 --> 00:10:21,899 The night of the vote, 353 00:10:21,900 --> 00:10:24,029 some of the old men 354 00:10:24,030 --> 00:10:26,009 were celebrating that they had 355 00:10:26,010 --> 00:10:28,569 defeated the regulation, 356 00:10:28,570 --> 00:10:29,369 oil and gas. 357 00:10:29,370 --> 00:10:31,349 Everyone had been drinking. 358 00:10:31,350 --> 00:10:33,479 And that's when one group of 359 00:10:33,480 --> 00:10:35,399 Texas oil men, small 360 00:10:35,400 --> 00:10:37,529 time wildcatter types, started 361 00:10:37,530 --> 00:10:39,569 harassing supporters of 362 00:10:39,570 --> 00:10:40,519 the commission. 363 00:10:40,520 --> 00:10:42,689 And one of those supporters was 364 00:10:42,690 --> 00:10:44,819 State Senator Gordon Byrnes. 365 00:10:44,820 --> 00:10:46,379 And this group of independent oil 366 00:10:46,380 --> 00:10:48,359 men confronted him in the lobby 367 00:10:48,360 --> 00:10:49,979 of the Steven F Austin Hotel. 368 00:10:49,980 --> 00:10:51,689 And they got an argument, got in a 369 00:10:51,690 --> 00:10:54,029 fight over and got to arguing, and 370 00:10:54,030 --> 00:10:56,099 somebody hit somebody and 371 00:10:56,100 --> 00:10:57,239 they hit the ground. 372 00:10:57,240 --> 00:10:58,949 Other accounts, including from Ralph 373 00:10:58,950 --> 00:11:00,419 Yarborough, make it sound more like 374 00:11:00,420 --> 00:11:02,399 a beating than a fight with 375 00:11:02,400 --> 00:11:04,919 at least three men setting on Burns. 376 00:11:04,920 --> 00:11:06,711 In fact, on the floor and stomped 377 00:11:06,712 --> 00:11:07,712 him and beat him and crippled him. 378 00:11:08,430 --> 00:11:09,989 The next day as the state Senate was 379 00:11:09,990 --> 00:11:11,489 set to vote on the measure. 380 00:11:11,490 --> 00:11:13,169 Burns was brought into Senate 381 00:11:13,170 --> 00:11:15,269 chambers, badly bruised 382 00:11:15,270 --> 00:11:16,469 in a wheelchair. 383 00:11:16,470 --> 00:11:18,809 The legislature was outraged 384 00:11:18,810 --> 00:11:19,709 about it. 385 00:11:19,710 --> 00:11:21,899 The anger among state politicians 386 00:11:21,900 --> 00:11:24,439 over the attack on one of their own. 387 00:11:24,440 --> 00:11:26,119 Was so great that they killed the 388 00:11:26,120 --> 00:11:26,899 new legislation. 389 00:11:26,900 --> 00:11:28,879 The Railroad Commission survived. 390 00:11:28,880 --> 00:11:30,919 It maintained its authority over 391 00:11:30,920 --> 00:11:31,789 oil and gas. 392 00:11:31,790 --> 00:11:33,529 It's a fascinating part of the 393 00:11:33,530 --> 00:11:35,779 history that that happened 394 00:11:35,780 --> 00:11:37,039 the way it did. 395 00:11:37,040 --> 00:11:39,169 Had they not acted 396 00:11:39,170 --> 00:11:41,209 foolishly and got 397 00:11:41,210 --> 00:11:43,249 in a fight, they would 398 00:11:43,250 --> 00:11:45,829 not have had the regulation. 399 00:11:45,830 --> 00:11:46,969 In his interview with Ralph 400 00:11:46,970 --> 00:11:48,859 Yarborough. David Prindle asked 401 00:11:48,860 --> 00:11:50,509 what happened to the independent 402 00:11:50,510 --> 00:11:52,789 oilman who beat the state senator 403 00:11:52,790 --> 00:11:54,529 at that hotel in Austin. 404 00:11:54,530 --> 00:11:56,569 In answer, Yarborough asks 405 00:11:56,570 --> 00:11:57,229 Prindle. 406 00:11:57,230 --> 00:11:58,699 Well, did you ever see the motion 407 00:11:58,700 --> 00:11:59,959 picture. 408 00:11:59,960 --> 00:12:01,429 Jail? Did you ever see the movie 409 00:12:01,430 --> 00:12:02,869 Giant? No, I didn't. 410 00:12:04,190 --> 00:12:05,209 He says. In the movie, there's a 411 00:12:05,210 --> 00:12:07,279 scene where a poor cowboy 412 00:12:07,280 --> 00:12:09,349 who has become a rich oil man makes 413 00:12:09,350 --> 00:12:11,239 a pass at a wealthy rancher's 414 00:12:11,240 --> 00:12:13,159 wife. The rancher pulls 415 00:12:13,160 --> 00:12:15,079 his gun to try to shoot the cowboy, 416 00:12:15,080 --> 00:12:16,699 and his friends say, No, you can't 417 00:12:16,700 --> 00:12:17,509 kill him now. 418 00:12:17,510 --> 00:12:18,429 He's too big. 419 00:12:18,430 --> 00:12:19,848 If you're going to get in that. 420 00:12:19,849 --> 00:12:20,983 You should have killed him when he was a poor, cowboy. 421 00:12:21,980 --> 00:12:24,619 By this time, he said, the Texas 422 00:12:24,620 --> 00:12:26,719 oilman had just gotten too 423 00:12:26,720 --> 00:12:28,099 big for the law. 424 00:12:28,100 --> 00:12:29,629 They were let off with a reprimand, 425 00:12:29,630 --> 00:12:31,459 which was quickly followed up by an 426 00:12:31,460 --> 00:12:33,439 apology from several supportive 427 00:12:33,440 --> 00:12:35,509 state senators for inconveniencing 428 00:12:35,510 --> 00:12:35,839 them. 429 00:12:35,840 --> 00:12:36,840 They were too big 430 00:12:37,760 --> 00:12:39,619 and they were about to get a 431 00:12:39,620 --> 00:12:40,940 lot bigger. 432 00:12:43,670 --> 00:12:45,169 More coming up after the break. 433 00:12:53,270 --> 00:12:55,129 So before we move forward, here is 434 00:12:55,130 --> 00:12:56,779 maybe a good place to point out, you 435 00:12:56,780 --> 00:12:57,949 know, what we've been looking at so 436 00:12:57,950 --> 00:12:59,359 far in this story. 437 00:12:59,360 --> 00:13:00,649 And I think it's important to point 438 00:13:00,650 --> 00:13:02,599 out that so far, even 439 00:13:02,600 --> 00:13:03,409 though this has all been about 440 00:13:03,410 --> 00:13:05,449 regulation and about 441 00:13:05,450 --> 00:13:08,059 big, massive fights between 442 00:13:08,060 --> 00:13:11,149 regulators and industry, 443 00:13:11,150 --> 00:13:12,709 the Railroad Commission's role is 444 00:13:12,710 --> 00:13:15,289 also kind of to protect 445 00:13:15,290 --> 00:13:16,699 the industry from itself. 446 00:13:16,700 --> 00:13:18,739 It's really working to support 447 00:13:18,740 --> 00:13:19,459 the industry. 448 00:13:19,460 --> 00:13:21,079 Yeah, the Railroad Commission is not 449 00:13:21,080 --> 00:13:22,519 against oil and gas. 450 00:13:22,520 --> 00:13:24,049 What it's doing is trying to support 451 00:13:24,050 --> 00:13:25,759 the industry by forcing these 452 00:13:25,760 --> 00:13:27,679 different factions, Big Oil 453 00:13:27,680 --> 00:13:29,659 and little Texas producers, to 454 00:13:29,660 --> 00:13:30,379 get along. 455 00:13:30,380 --> 00:13:31,969 And we're going to see a lot more of 456 00:13:31,970 --> 00:13:33,559 that as we keep telling this story. 457 00:13:33,560 --> 00:13:35,389 And you see it a lot in these 458 00:13:35,390 --> 00:13:37,369 kind of crisis moments in the Texas 459 00:13:37,370 --> 00:13:38,809 energy industry when suddenly things 460 00:13:38,810 --> 00:13:40,279 are turned on their head and there 461 00:13:40,280 --> 00:13:42,139 needs to be some kind of 462 00:13:42,140 --> 00:13:43,489 state intervention. 463 00:13:43,490 --> 00:13:44,719 Who ends up benefiting? 464 00:13:44,720 --> 00:13:46,429 Is it the small time drillers or the 465 00:13:46,430 --> 00:13:48,049 big oil companies? 466 00:13:48,050 --> 00:13:49,369 And one group that really has not 467 00:13:49,370 --> 00:13:51,529 come up is, you know, the consumer 468 00:13:51,530 --> 00:13:51,649 for. 469 00:13:51,650 --> 00:13:52,549 The Railroad Commission. 470 00:13:52,550 --> 00:13:54,199 The question is what faction of the 471 00:13:54,200 --> 00:13:55,789 industry is the government going to 472 00:13:55,790 --> 00:13:56,629 support? 473 00:13:56,630 --> 00:13:57,799 And we're going to see how that 474 00:13:57,800 --> 00:13:58,800 shakes out. 475 00:14:01,070 --> 00:14:02,659 So now the Texas Railroad Commission 476 00:14:02,660 --> 00:14:04,249 has finally come into its own thanks 477 00:14:04,250 --> 00:14:06,259 to this bar fight in downtown 478 00:14:06,260 --> 00:14:07,159 Austin. 479 00:14:07,160 --> 00:14:08,989 It has kept its power 480 00:14:08,990 --> 00:14:10,999 to enforce the rules over Texas oil 481 00:14:11,000 --> 00:14:11,539 and gas. 482 00:14:11,540 --> 00:14:13,099 This does not mean that enforcing 483 00:14:13,100 --> 00:14:14,929 the rules came any easier at 484 00:14:14,930 --> 00:14:15,709 the outset. 485 00:14:15,710 --> 00:14:17,299 I mean, like we said, opponents of 486 00:14:17,300 --> 00:14:18,859 these production controls, they 487 00:14:18,860 --> 00:14:20,719 basically fought a war over them in 488 00:14:20,720 --> 00:14:21,829 East Texas. 489 00:14:21,830 --> 00:14:22,969 But within a matter of years, the 490 00:14:22,970 --> 00:14:24,949 issue was pretty much settled. 491 00:14:24,950 --> 00:14:26,059 The commission not only set the 492 00:14:26,060 --> 00:14:27,889 rules, but oil companies, 493 00:14:27,890 --> 00:14:29,869 big and small, followed them. 494 00:14:29,870 --> 00:14:31,609 The main reason that these 495 00:14:31,610 --> 00:14:33,529 rebellious Texas oilmen came 496 00:14:33,530 --> 00:14:35,749 to accept state regulation 497 00:14:35,750 --> 00:14:37,519 was really they decided they liked 498 00:14:37,520 --> 00:14:37,879 it. 499 00:14:37,880 --> 00:14:39,469 It turned out it really worked for 500 00:14:39,470 --> 00:14:39,799 them. 501 00:14:39,800 --> 00:14:42,019 It did. And to understand how 502 00:14:42,020 --> 00:14:43,969 we've got to get a little 503 00:14:43,970 --> 00:14:45,889 more into detail about this thing 504 00:14:45,890 --> 00:14:47,969 called proration, 505 00:14:47,970 --> 00:14:49,849 what was essentially a system 506 00:14:49,850 --> 00:14:50,719 of price control. 507 00:14:50,720 --> 00:14:52,639 Yeah, it's a form of rationing. 508 00:14:52,640 --> 00:14:54,589 Rationing of oil supply. 509 00:14:54,590 --> 00:14:55,819 So how this would work is that all 510 00:14:55,820 --> 00:14:57,109 the different kind of parts of the 511 00:14:57,110 --> 00:14:58,579 oil industry and the Railroad 512 00:14:58,580 --> 00:15:00,589 Commission would sit down every 513 00:15:00,590 --> 00:15:02,689 month to agree on 514 00:15:02,690 --> 00:15:05,599 what supply of oil was available 515 00:15:05,600 --> 00:15:07,339 and to try to figure out what they 516 00:15:07,340 --> 00:15:09,199 thought oil demand would be. 517 00:15:09,200 --> 00:15:10,819 Once these two factor supply and 518 00:15:10,820 --> 00:15:12,139 demand were determined, the 519 00:15:12,140 --> 00:15:13,519 commission would tell producers how 520 00:15:13,520 --> 00:15:15,259 much crude they could pump from each 521 00:15:15,260 --> 00:15:17,179 oil field to meet that set 522 00:15:17,180 --> 00:15:17,779 demand. 523 00:15:17,780 --> 00:15:19,429 And this was all a friendly meeting. 524 00:15:19,430 --> 00:15:20,749 I mean, there were conflicts under 525 00:15:20,750 --> 00:15:22,609 the surface, but everybody knew that 526 00:15:22,610 --> 00:15:24,229 they had to keep the ship afloat. 527 00:15:24,230 --> 00:15:25,759 Author David Prindle says that 528 00:15:25,760 --> 00:15:27,829 balancing of supply and demand 529 00:15:27,830 --> 00:15:30,289 was basically how prices were fixed. 530 00:15:30,290 --> 00:15:31,279 They needed to find this kind of 531 00:15:31,280 --> 00:15:33,259 Goldilocks just right amount 532 00:15:33,260 --> 00:15:35,209 of crude to produce 533 00:15:35,210 --> 00:15:36,679 to keep the prices stable so. 534 00:15:36,680 --> 00:15:38,269 That everybody makes money and then 535 00:15:38,270 --> 00:15:39,889 they can do the same thing the next 536 00:15:39,890 --> 00:15:40,369 month. 537 00:15:40,370 --> 00:15:41,899 And for the small time independent 538 00:15:41,900 --> 00:15:44,089 oil guys, this was the important 539 00:15:44,090 --> 00:15:45,949 part. After they agreed upon the 540 00:15:45,950 --> 00:15:47,029 amount of oil that was going to be 541 00:15:47,030 --> 00:15:48,709 produced, the commission would give 542 00:15:48,710 --> 00:15:50,629 each producer a slice of that 543 00:15:50,630 --> 00:15:51,199 pie. 544 00:15:51,200 --> 00:15:52,759 So you can pump this much from this 545 00:15:52,760 --> 00:15:54,709 oil well. You can pump this much 546 00:15:54,710 --> 00:15:56,149 from that oil well. 547 00:15:56,150 --> 00:15:57,769 The amount of oil each company was 548 00:15:57,770 --> 00:15:59,209 allowed to produce was called their 549 00:15:59,210 --> 00:15:59,959 allowable. 550 00:15:59,960 --> 00:16:01,579 During the East Texas oil boom. 551 00:16:01,580 --> 00:16:03,859 The little independent oil men, 552 00:16:03,860 --> 00:16:05,749 they hated this system because it 553 00:16:05,750 --> 00:16:08,269 set a cap on their production. 554 00:16:08,270 --> 00:16:09,469 But now that the system was in 555 00:16:09,470 --> 00:16:11,149 place, they realized that they were 556 00:16:11,150 --> 00:16:12,709 getting special treatment from the 557 00:16:12,710 --> 00:16:13,849 Railroad Commission. 558 00:16:13,850 --> 00:16:15,739 They were getting an oversize slice 559 00:16:15,740 --> 00:16:16,669 of that pie. 560 00:16:16,670 --> 00:16:17,779 Yeah. I mean, after all, these 561 00:16:17,780 --> 00:16:19,879 commissioners needed to stay 562 00:16:19,880 --> 00:16:21,859 friendly with the local guys. 563 00:16:21,860 --> 00:16:23,539 These are the people that are voting 564 00:16:23,540 --> 00:16:24,169 them in. 565 00:16:24,170 --> 00:16:25,969 So they made sure smaller Texas 566 00:16:25,970 --> 00:16:27,379 drillers got more than their fair 567 00:16:27,380 --> 00:16:29,449 share of allowable versus the big 568 00:16:29,450 --> 00:16:30,229 companies. 569 00:16:30,230 --> 00:16:32,749 And the smaller you were, 570 00:16:32,750 --> 00:16:34,759 the more the rules favored you. 571 00:16:34,760 --> 00:16:36,319 They kept the prices up, which made 572 00:16:36,320 --> 00:16:37,399 the big guys happy. 573 00:16:37,400 --> 00:16:39,719 And they made rules that favored 574 00:16:39,720 --> 00:16:41,689 the little guys, which 575 00:16:41,690 --> 00:16:42,919 made them profitable. 576 00:16:42,920 --> 00:16:44,779 And therefore, everybody 577 00:16:44,780 --> 00:16:45,949 began to love the Railroad 578 00:16:45,950 --> 00:16:46,759 commission. 579 00:16:46,760 --> 00:16:48,469 This system helped the little guys 580 00:16:48,470 --> 00:16:49,369 in other ways, too. 581 00:16:49,370 --> 00:16:50,539 There's this one story about a 582 00:16:50,540 --> 00:16:52,369 driller who struck oil in 583 00:16:52,370 --> 00:16:54,259 Wyoming. The guy bragged to the 584 00:16:54,260 --> 00:16:55,429 Railroad Commission about how he 585 00:16:55,430 --> 00:16:57,319 could pump as much oil as 586 00:16:57,320 --> 00:16:58,999 he wanted because he wasn't in 587 00:16:59,000 --> 00:16:59,629 Texas. 588 00:16:59,630 --> 00:17:00,949 But then he realized there was only 589 00:17:00,950 --> 00:17:02,989 one pipeline connected to his wells, 590 00:17:02,990 --> 00:17:05,088 and that pipeline didn't want any 591 00:17:05,089 --> 00:17:05,838 of his oil. 592 00:17:05,839 --> 00:17:08,269 In Texas, where the state guaranteed 593 00:17:08,270 --> 00:17:10,338 every producer a share of the market 594 00:17:10,339 --> 00:17:12,439 and allowable, some of this guy's 595 00:17:12,440 --> 00:17:13,789 crude would have made it down that 596 00:17:13,790 --> 00:17:14,509 pipeline and. 597 00:17:14,510 --> 00:17:15,709 He would have gotten paid. 598 00:17:15,710 --> 00:17:18,229 Maybe regulation wasn't so bad. 599 00:17:18,230 --> 00:17:20,389 Finally, there was one other really 600 00:17:20,390 --> 00:17:22,309 big reason this fight over proration 601 00:17:22,310 --> 00:17:24,858 was pretty quickly settled in Texas. 602 00:17:24,859 --> 00:17:27,348 It turned out there was another much 603 00:17:27,349 --> 00:17:29,779 bigger fight on the horizon. 604 00:17:29,780 --> 00:17:31,609 Yeah, a really, really big 605 00:17:31,610 --> 00:17:32,479 one. 606 00:17:32,480 --> 00:17:34,639 On September the 1st, 1939, 607 00:17:34,640 --> 00:17:37,099 the Nazi army smashed into Poland. 608 00:17:37,100 --> 00:17:38,959 The start of the Second World War 609 00:17:38,960 --> 00:17:40,909 sent oil demand soaring with 610 00:17:40,910 --> 00:17:42,679 producers in Texas and basically 611 00:17:42,680 --> 00:17:43,999 everywhere else, pumping more and 612 00:17:44,000 --> 00:17:45,019 more crude. 613 00:17:45,020 --> 00:17:46,759 The proration debate just became 614 00:17:46,760 --> 00:17:48,019 less relevant. 615 00:17:48,020 --> 00:17:49,519 Six hours after Great Britain 616 00:17:49,520 --> 00:17:51,469 declared war on Nazi Germany, 617 00:17:51,470 --> 00:17:53,539 the Republic of France followed. 618 00:17:53,540 --> 00:17:55,639 For a lot of people, this huge need 619 00:17:55,640 --> 00:17:57,529 for oil during the war prove that 620 00:17:57,530 --> 00:18:00,019 capping oil production in the 1930s 621 00:18:00,020 --> 00:18:01,549 had been a great idea. 622 00:18:01,550 --> 00:18:02,819 Right. If these Texas people had 623 00:18:02,820 --> 00:18:04,669 been kind of drained for pennies in 624 00:18:04,670 --> 00:18:06,679 the early 30s, they said there just 625 00:18:06,680 --> 00:18:08,569 would have been less oil 626 00:18:08,570 --> 00:18:10,549 left when it was needed when war 627 00:18:10,550 --> 00:18:11,089 broke out. 628 00:18:11,090 --> 00:18:12,619 Production limits had ensured there 629 00:18:12,620 --> 00:18:14,989 was this reserve capacity available 630 00:18:14,990 --> 00:18:16,339 when regulators had to take their 631 00:18:16,340 --> 00:18:17,989 fingers off the spigot. 632 00:18:17,990 --> 00:18:19,579 And it's important to underline the 633 00:18:19,580 --> 00:18:20,989 strategic part of this. 634 00:18:20,990 --> 00:18:22,039 This is going to come up later in 635 00:18:22,040 --> 00:18:23,689 our story. People are beginning to 636 00:18:23,690 --> 00:18:25,729 understand how regulating oil 637 00:18:25,730 --> 00:18:28,039 supply wasn't just good for business 638 00:18:28,040 --> 00:18:29,389 or for the oil field. 639 00:18:29,390 --> 00:18:31,219 It was a matter of national 640 00:18:31,220 --> 00:18:32,029 security. 641 00:18:32,030 --> 00:18:33,949 Today, oil is the most 642 00:18:33,950 --> 00:18:35,749 precious single substance the Earth 643 00:18:35,750 --> 00:18:37,729 produces, and the great oil 644 00:18:37,730 --> 00:18:39,559 fields are the most vital strategic 645 00:18:39,560 --> 00:18:40,789 centers of the globe. 646 00:18:40,790 --> 00:18:42,649 Even after the war started, railroad 647 00:18:42,650 --> 00:18:44,329 commissioners kept control over 648 00:18:44,330 --> 00:18:45,109 production. 649 00:18:45,110 --> 00:18:46,909 And they were not afraid to use that 650 00:18:46,910 --> 00:18:48,889 leverage sometimes to give 651 00:18:48,890 --> 00:18:50,509 their home state producers a hand 652 00:18:50,510 --> 00:18:50,839 up. 653 00:18:50,840 --> 00:18:53,059 Let me tell you a story about 1940. 654 00:18:53,060 --> 00:18:53,749 Here's David Prindle. 655 00:18:53,750 --> 00:18:55,609 Again in 1940. 656 00:18:55,610 --> 00:18:57,049 World War Two has broken out in 657 00:18:57,050 --> 00:18:57,289 Europe. 658 00:18:57,290 --> 00:18:58,519 And he says Exxon, which is then 659 00:18:58,520 --> 00:18:59,659 known as Humble oil, was one of 660 00:18:59,660 --> 00:19:01,439 these big. Oil companies. 661 00:19:01,440 --> 00:19:03,419 It went to the Railroad Commission 662 00:19:03,420 --> 00:19:05,729 to ask for an increase in the amount 663 00:19:05,730 --> 00:19:07,829 of crude that the company could pump 664 00:19:07,830 --> 00:19:08,789 along the Gulf Coast. 665 00:19:08,790 --> 00:19:10,679 Please give us this big increase in 666 00:19:10,680 --> 00:19:12,509 our allowable so that we can 667 00:19:12,510 --> 00:19:14,639 send the oil to Britain 668 00:19:14,640 --> 00:19:15,719 to fight the Germans. 669 00:19:15,720 --> 00:19:17,939 And the Railroad Commission says 670 00:19:17,940 --> 00:19:18,479 no. 671 00:19:18,480 --> 00:19:19,889 And the company says, What do you 672 00:19:19,890 --> 00:19:20,789 mean, no? 673 00:19:20,790 --> 00:19:22,379 We're going to help fight the Nazis. 674 00:19:22,380 --> 00:19:23,789 And the railroad commissioner said, 675 00:19:23,790 --> 00:19:25,439 you know what we've noticed? 676 00:19:25,440 --> 00:19:26,879 We've noticed that there's a whole 677 00:19:26,880 --> 00:19:28,829 bunch of unconnected wells 678 00:19:28,830 --> 00:19:30,749 in the Permian Basin 679 00:19:30,750 --> 00:19:32,069 and they can't get that oil to 680 00:19:32,070 --> 00:19:33,659 market because there's no pipeline 681 00:19:33,660 --> 00:19:33,899 there. 682 00:19:33,900 --> 00:19:36,059 The oil company guy is shocked. 683 00:19:36,060 --> 00:19:38,309 You can't make us 684 00:19:38,310 --> 00:19:40,469 build a pipeline to West Texas. 685 00:19:40,470 --> 00:19:42,209 You do not have the authority. 686 00:19:42,210 --> 00:19:44,009 And the commission guy, he says. 687 00:19:44,010 --> 00:19:45,899 Who said anything about making you 688 00:19:45,900 --> 00:19:46,829 build a pipeline? 689 00:19:46,830 --> 00:19:48,959 All we said was we would not 690 00:19:48,960 --> 00:19:50,759 increase your allowable. 691 00:19:50,760 --> 00:19:52,109 And we'd notice that there were a 692 00:19:52,110 --> 00:19:53,699 whole bunch of unconnected wells in 693 00:19:53,700 --> 00:19:54,509 West Texas. 694 00:19:54,510 --> 00:19:56,369 He says the oil company guys thought 695 00:19:56,370 --> 00:19:58,229 about this for a little bit 696 00:19:58,230 --> 00:20:00,209 and built the pipeline to West 697 00:20:00,210 --> 00:20:00,899 Texas. 698 00:20:00,900 --> 00:20:02,849 And a whole bunch of small producers 699 00:20:02,850 --> 00:20:04,379 out there got rich. 700 00:20:04,380 --> 00:20:05,909 This pipeline was just one of many 701 00:20:05,910 --> 00:20:07,409 built during World War Two, 702 00:20:07,410 --> 00:20:08,609 especially after the U.S. 703 00:20:08,610 --> 00:20:09,509 joined the fight. 704 00:20:09,510 --> 00:20:11,099 Pipeline construction was a huge 705 00:20:11,100 --> 00:20:13,319 part of the war effort at home. 706 00:20:13,320 --> 00:20:15,449 Every U-boat and grader the German 707 00:20:15,450 --> 00:20:17,849 Admiralty issues these instructions. 708 00:20:17,850 --> 00:20:19,769 Your first objective will be the 709 00:20:19,770 --> 00:20:20,489 tankers. 710 00:20:20,490 --> 00:20:22,289 Before this, if you wanted to move 711 00:20:22,290 --> 00:20:23,939 Texas oil up the East Coast, you 712 00:20:23,940 --> 00:20:25,229 could put it on a train. 713 00:20:25,230 --> 00:20:27,119 But a main way to do it was to 714 00:20:27,120 --> 00:20:28,409 put it on a tanker ship. 715 00:20:28,410 --> 00:20:29,759 But after the war started, those 716 00:20:29,760 --> 00:20:31,529 ships became targets. 717 00:20:31,530 --> 00:20:33,389 The U-boats must be battled to 718 00:20:33,390 --> 00:20:34,449 the death. 719 00:20:34,450 --> 00:20:36,299 The stuff of production must go 720 00:20:36,300 --> 00:20:37,300 through. 721 00:20:37,830 --> 00:20:39,089 Upon the Battle of the Atlantic, 722 00:20:39,090 --> 00:20:41,399 depends the success of assaults 723 00:20:41,400 --> 00:20:42,719 in the making. 724 00:20:42,720 --> 00:20:45,119 German U-boat sneaking right off 725 00:20:45,120 --> 00:20:46,619 the coast of the U.S. 726 00:20:46,620 --> 00:20:47,549 started sinking. 727 00:20:47,550 --> 00:20:49,469 Tankers torpedoed 728 00:20:49,470 --> 00:20:50,729 and sunk off the North Carolina 729 00:20:50,730 --> 00:20:52,799 coast. American tanker Alan 730 00:20:52,800 --> 00:20:54,809 Jackson, 22, lost. 731 00:20:54,810 --> 00:20:56,429 This part of the war doesn't get a 732 00:20:56,430 --> 00:20:57,689 lot of attention nowadays, but it 733 00:20:57,690 --> 00:20:59,759 was devastating for the allies. 734 00:20:59,760 --> 00:21:01,319 Torpedoed and sunk off the Dutch 735 00:21:01,320 --> 00:21:02,219 West Indies. 736 00:21:02,220 --> 00:21:04,199 Norwegian Tanker Coast Guard, 737 00:21:04,200 --> 00:21:05,339 39 dead. 738 00:21:05,340 --> 00:21:07,199 Some historians have called this the 739 00:21:07,200 --> 00:21:08,769 second Pearl Harbor. 740 00:21:08,770 --> 00:21:09,989 It was that bad. Germans were 741 00:21:09,990 --> 00:21:11,999 sinking hundreds of ships from 742 00:21:12,000 --> 00:21:13,919 the Gulf of Mexico up the 743 00:21:13,920 --> 00:21:15,479 coast of New England and beyond. 744 00:21:15,480 --> 00:21:17,339 I could list 31 ships lost in the 745 00:21:17,340 --> 00:21:19,589 Atlantic in the past five weeks. 746 00:21:19,590 --> 00:21:20,729 So eventually the U.S. 747 00:21:20,730 --> 00:21:23,129 government said this has to stop. 748 00:21:23,130 --> 00:21:24,329 We should start moving some of that 749 00:21:24,330 --> 00:21:26,999 oil by pipeline instead of boat. 750 00:21:27,000 --> 00:21:29,339 So the government built two huge 751 00:21:29,340 --> 00:21:31,409 lines. One, they called 752 00:21:31,410 --> 00:21:33,269 the big inch and one they 753 00:21:33,270 --> 00:21:35,609 called the little big inch. 754 00:21:35,610 --> 00:21:37,529 These lines connected Texas 755 00:21:37,530 --> 00:21:38,819 to the East Coast. 756 00:21:38,820 --> 00:21:40,649 Constructing an oil pipeline 757 00:21:40,650 --> 00:21:42,389 from the Midwest to eastern points. 758 00:21:42,390 --> 00:21:44,339 In the United States, engineers 759 00:21:44,340 --> 00:21:45,239 are forced to cross. 760 00:21:45,240 --> 00:21:47,069 Many a mighty river. 761 00:21:47,070 --> 00:21:49,139 The big inch the wider of the two 762 00:21:49,140 --> 00:21:51,059 started in the same East Texas oil 763 00:21:51,060 --> 00:21:52,619 fields, which are just ten years 764 00:21:52,620 --> 00:21:54,839 earlier. But under martial law, 765 00:21:54,840 --> 00:21:56,639 this pipeline move oil to New York 766 00:21:56,640 --> 00:21:59,159 over 1200 miles away. 767 00:21:59,160 --> 00:22:01,499 Big inch, as the line is called 768 00:22:01,500 --> 00:22:02,879 now, has another whopper way to 769 00:22:02,880 --> 00:22:03,749 hurdle. 770 00:22:03,750 --> 00:22:05,429 So they plant tons of dynamite to 771 00:22:05,430 --> 00:22:07,259 blast the bed for the pipe beneath 772 00:22:07,260 --> 00:22:08,129 the river's bottom. 773 00:22:08,130 --> 00:22:10,169 The little big inch, 774 00:22:10,170 --> 00:22:11,789 which was, I gather, slightly 775 00:22:11,790 --> 00:22:13,919 narrower, but actually longer. 776 00:22:13,920 --> 00:22:16,019 It was 1400 777 00:22:16,020 --> 00:22:18,839 miles long, and it brought refined 778 00:22:18,840 --> 00:22:21,209 petroleum from the Gulf Coast 779 00:22:21,210 --> 00:22:22,919 as far up as New Jersey. 780 00:22:22,920 --> 00:22:24,749 Now, hold tight and watch for 781 00:22:24,750 --> 00:22:25,750 the explosion. 782 00:22:30,730 --> 00:22:32,889 It's incredible to think about this 783 00:22:32,890 --> 00:22:34,929 nowadays, but both these projects 784 00:22:34,930 --> 00:22:37,089 were completed in about a year. 785 00:22:40,130 --> 00:22:42,229 So the result of this wartime 786 00:22:42,230 --> 00:22:44,239 boom in pipeline building meant 787 00:22:44,240 --> 00:22:46,339 that Texas came out of the war 788 00:22:46,340 --> 00:22:48,349 linked more tightly, not 789 00:22:48,350 --> 00:22:49,399 not even just with the rest of the 790 00:22:49,400 --> 00:22:51,259 country, but with the rest 791 00:22:51,260 --> 00:22:52,669 of the world. 792 00:22:52,670 --> 00:22:54,019 And that would have all sorts of 793 00:22:54,020 --> 00:22:56,329 consequences, including 794 00:22:56,330 --> 00:22:58,669 for one Texas energy source 795 00:22:58,670 --> 00:23:00,619 that hasn't really come up much 796 00:23:00,620 --> 00:23:01,279 yet. 797 00:23:01,280 --> 00:23:03,109 It's the cleanest fuel, 798 00:23:03,110 --> 00:23:05,059 the most efficient fuel. 799 00:23:05,060 --> 00:23:07,099 In fact, it's the perfect 800 00:23:07,100 --> 00:23:08,100 fuel. 801 00:23:09,110 --> 00:23:11,329 So far, our whole story has focused 802 00:23:11,330 --> 00:23:12,889 on oil. Black, gold. 803 00:23:12,890 --> 00:23:14,269 Right. It's the stuff that most 804 00:23:14,270 --> 00:23:15,889 Texas drillers were looking for when 805 00:23:15,890 --> 00:23:17,449 they dug into the earth. 806 00:23:17,450 --> 00:23:18,889 But there was something else coming 807 00:23:18,890 --> 00:23:20,719 out of the ground as the Texas 808 00:23:20,720 --> 00:23:22,699 oil fields opened up to the world. 809 00:23:22,700 --> 00:23:24,079 You couldn't see it. 810 00:23:24,080 --> 00:23:25,669 You couldn't really smell it. 811 00:23:25,670 --> 00:23:27,679 But it was potent stuff. 812 00:23:27,680 --> 00:23:30,049 We're talking about natural gas. 813 00:23:30,050 --> 00:23:32,209 But where does it all come from? 814 00:23:32,210 --> 00:23:34,159 And most important, how 815 00:23:34,160 --> 00:23:36,019 long will we have it? 816 00:23:36,020 --> 00:23:37,219 And I'm so glad we're talking about 817 00:23:37,220 --> 00:23:39,289 this, Mose, because what 818 00:23:39,290 --> 00:23:40,729 is natural gas? 819 00:23:40,730 --> 00:23:41,719 Something we talk about a lot. 820 00:23:41,720 --> 00:23:43,369 But I think a lot of people still 821 00:23:43,370 --> 00:23:45,769 don't have a full grasp on 822 00:23:45,770 --> 00:23:47,419 what this stuff is, where it comes 823 00:23:47,420 --> 00:23:49,279 from. It is basically 824 00:23:49,280 --> 00:23:50,539 it's methane, right? 825 00:23:50,540 --> 00:23:52,969 It's a gas that comes 826 00:23:52,970 --> 00:23:54,859 about. It's created almost the 827 00:23:54,860 --> 00:23:56,779 same way as oil. 828 00:23:56,780 --> 00:23:58,489 It's made of the same stuff that oil 829 00:23:58,490 --> 00:24:00,289 is made of. And, you know, like the 830 00:24:00,290 --> 00:24:02,239 kind of elementary school version, 831 00:24:02,240 --> 00:24:04,159 ancient organic plant 832 00:24:04,160 --> 00:24:05,299 matter. 833 00:24:05,300 --> 00:24:07,279 Maybe some dinosaurs mixed in there. 834 00:24:07,280 --> 00:24:09,109 They all go underground and get 835 00:24:09,110 --> 00:24:10,999 cooked underground for millions 836 00:24:11,000 --> 00:24:12,079 and millions of years. 837 00:24:12,080 --> 00:24:13,699 And that makes oil Well, that's the 838 00:24:13,700 --> 00:24:15,559 same process that that 839 00:24:15,560 --> 00:24:16,969 creates natural gas. 840 00:24:16,970 --> 00:24:18,799 So it's not in liquid form yet. 841 00:24:18,800 --> 00:24:20,719 And you usually find it in 842 00:24:20,720 --> 00:24:22,549 oil reservoirs, often kind 843 00:24:22,550 --> 00:24:24,049 of almost like floating on top of 844 00:24:24,050 --> 00:24:25,309 the oil. 845 00:24:25,310 --> 00:24:28,009 And during the early years of oil, 846 00:24:28,010 --> 00:24:29,929 natural gas is really kind of seen 847 00:24:29,930 --> 00:24:30,739 as a hazard. 848 00:24:30,740 --> 00:24:32,599 Really. It was it was poisonous. 849 00:24:32,600 --> 00:24:33,859 If you breathe too much of it, it 850 00:24:33,860 --> 00:24:34,849 could kill you. 851 00:24:34,850 --> 00:24:35,930 It was flammable. 852 00:24:37,190 --> 00:24:39,109 Cool. Cool. So 853 00:24:39,110 --> 00:24:40,459 what is natural gas. 854 00:24:41,570 --> 00:24:43,909 Is it's gas you can set on fire. 855 00:24:43,910 --> 00:24:44,910 Got it. 856 00:24:46,540 --> 00:24:48,159 Obviously people eventually realized 857 00:24:48,160 --> 00:24:49,779 it was useful, otherwise we wouldn't 858 00:24:49,780 --> 00:24:50,499 be talking about it. 859 00:24:50,500 --> 00:24:51,369 Absolutely right. Yeah. 860 00:24:51,370 --> 00:24:53,469 You could use natural gas 861 00:24:53,470 --> 00:24:55,329 first as lighting and a heat 862 00:24:55,330 --> 00:24:56,409 source. 863 00:24:56,410 --> 00:24:58,479 You could use it to power machinery. 864 00:24:58,480 --> 00:25:00,099 And people, you know, pretty quickly 865 00:25:00,100 --> 00:25:02,019 started doing this, but only if 866 00:25:02,020 --> 00:25:03,849 you are close enough to have a 867 00:25:03,850 --> 00:25:05,709 pipeline that could bring it to 868 00:25:05,710 --> 00:25:05,979 you. 869 00:25:05,980 --> 00:25:07,809 Right. This was the real challenge 870 00:25:07,810 --> 00:25:09,519 of gas. You couldn't move it or 871 00:25:09,520 --> 00:25:11,469 store it like with oil. 872 00:25:11,470 --> 00:25:13,299 So the 1940s in Texas, people 873 00:25:13,300 --> 00:25:15,129 were using a lot of gas in 874 00:25:15,130 --> 00:25:17,199 the state like most had for heating, 875 00:25:17,200 --> 00:25:19,269 lighting and starting to use more 876 00:25:19,270 --> 00:25:21,609 of it for generating electricity. 877 00:25:21,610 --> 00:25:23,259 Yeah, but there was so much of it 878 00:25:23,260 --> 00:25:25,269 coming from the ground in Texas that 879 00:25:25,270 --> 00:25:26,709 the rest of the gas that was coming 880 00:25:26,710 --> 00:25:28,569 up was just getting 881 00:25:28,570 --> 00:25:30,489 set on fire, like just getting 882 00:25:30,490 --> 00:25:32,229 set on fire and burned off in the 883 00:25:32,230 --> 00:25:34,299 oil fields, mostly at oil wells 884 00:25:34,300 --> 00:25:36,309 just to stop it from spewing into 885 00:25:36,310 --> 00:25:37,119 the atmosphere. 886 00:25:37,120 --> 00:25:38,619 There's still happens today. 887 00:25:38,620 --> 00:25:40,179 It's called flaring. 888 00:25:40,180 --> 00:25:42,159 And just like today, back 889 00:25:42,160 --> 00:25:44,529 then, a lot of people hated 890 00:25:44,530 --> 00:25:45,879 it. They hated flaring. 891 00:25:45,880 --> 00:25:47,949 And in these archival interviews 892 00:25:47,950 --> 00:25:48,939 with people from the Railroad 893 00:25:48,940 --> 00:25:50,769 Commission, it comes up a 894 00:25:50,770 --> 00:25:51,369 lot. 895 00:25:51,370 --> 00:25:53,469 And I used to drive from Austin 896 00:25:53,470 --> 00:25:54,099 and Corpus. 897 00:25:54,100 --> 00:25:55,869 They used to always make me sick. 898 00:25:55,870 --> 00:25:57,759 This is a man named Jack Bommel. 899 00:25:57,760 --> 00:25:59,229 He was the head of the oil and gas 900 00:25:59,230 --> 00:26:00,939 division at the Railroad Commission. 901 00:26:00,940 --> 00:26:02,229 That read the newspaper. 902 00:26:02,230 --> 00:26:03,009 At night. 903 00:26:03,010 --> 00:26:04,839 He says the flaring was so bright 904 00:26:04,840 --> 00:26:06,669 you could read the newspaper at 905 00:26:06,670 --> 00:26:07,359 night. 906 00:26:07,360 --> 00:26:09,079 Yeah, you know. 907 00:26:09,080 --> 00:26:11,299 So for Bommel and others, 908 00:26:11,300 --> 00:26:13,219 flaring was wasteful and 909 00:26:13,220 --> 00:26:14,629 bad for the environment. 910 00:26:14,630 --> 00:26:16,489 But it happened because it 911 00:26:16,490 --> 00:26:18,349 was the cheapest way of 912 00:26:18,350 --> 00:26:20,239 getting rid of gas that nobody 913 00:26:20,240 --> 00:26:20,809 wanted. 914 00:26:20,810 --> 00:26:22,129 There was no market. 915 00:26:22,130 --> 00:26:23,419 You couldn't sell it, couldn't give 916 00:26:23,420 --> 00:26:24,259 it away. 917 00:26:24,260 --> 00:26:25,909 And they literally tried to give it 918 00:26:25,910 --> 00:26:26,389 away. 919 00:26:26,390 --> 00:26:28,339 At one point, the city of Amarillo 920 00:26:28,340 --> 00:26:30,289 promised 25 years 921 00:26:30,290 --> 00:26:32,359 of free natural gas 922 00:26:32,360 --> 00:26:34,219 for any industry that 923 00:26:34,220 --> 00:26:35,220 wanted to move there. 924 00:26:37,160 --> 00:26:38,160 No takers. 925 00:26:39,180 --> 00:26:41,159 Until this moment we described 926 00:26:41,160 --> 00:26:42,509 after World War Two. 927 00:26:42,510 --> 00:26:44,429 Now hold tight and watch for the 928 00:26:44,430 --> 00:26:45,430 explosion. 929 00:26:48,730 --> 00:26:50,559 Now these new huge 930 00:26:50,560 --> 00:26:53,109 pipelines can move Texas gas 931 00:26:53,110 --> 00:26:54,110 all over the country. 932 00:26:55,780 --> 00:26:57,699 The big and little inch lines 933 00:26:57,700 --> 00:26:59,679 were completed in the 934 00:26:59,680 --> 00:27:01,389 technical transformation company 935 00:27:01,390 --> 00:27:03,499 build their lines up to the Tenneco. 936 00:27:03,500 --> 00:27:05,139 That was a huge natural gas 937 00:27:05,140 --> 00:27:05,799 pipeline. 938 00:27:05,800 --> 00:27:07,539 We've found that there is some 939 00:27:07,540 --> 00:27:09,369 outlet for gas which could be 940 00:27:09,370 --> 00:27:10,179 used. 941 00:27:10,180 --> 00:27:11,949 Texas natural gas could go to the 942 00:27:11,950 --> 00:27:13,809 Midwest to power factories, 943 00:27:13,810 --> 00:27:15,489 the Northeast to heat homes. 944 00:27:15,490 --> 00:27:17,349 Suddenly there was this big 945 00:27:17,350 --> 00:27:18,279 market. 946 00:27:18,280 --> 00:27:19,869 Not surprisingly, the Railroad 947 00:27:19,870 --> 00:27:21,519 Commission thought this was their 948 00:27:21,520 --> 00:27:23,559 chance to start controlling 949 00:27:23,560 --> 00:27:25,509 that market like they did with oil. 950 00:27:25,510 --> 00:27:26,859 But there was a problem. 951 00:27:26,860 --> 00:27:28,509 The pipeline companies had already 952 00:27:28,510 --> 00:27:30,429 taken control of the gas market. 953 00:27:30,430 --> 00:27:31,869 The pipelines, after all, were the 954 00:27:31,870 --> 00:27:33,909 ones with the power to divvy 955 00:27:33,910 --> 00:27:35,169 up the market in the oil field, 956 00:27:35,170 --> 00:27:37,209 decide which well got which 957 00:27:37,210 --> 00:27:39,189 cut in whatever field 958 00:27:39,190 --> 00:27:39,879 they controlled. 959 00:27:39,880 --> 00:27:41,409 Like that story about the driller in 960 00:27:41,410 --> 00:27:42,189 Wyoming, they. 961 00:27:42,190 --> 00:27:43,899 Were kind of pro raiding the gas 962 00:27:43,900 --> 00:27:44,409 field. 963 00:27:44,410 --> 00:27:45,459 There were stories of pipeline 964 00:27:45,460 --> 00:27:47,199 companies strong arming gas. 965 00:27:47,200 --> 00:27:48,669 Producers, telling them they 966 00:27:48,670 --> 00:27:50,139 wouldn't be able to sell their gas. 967 00:27:50,140 --> 00:27:51,429 If they went to the commission with 968 00:27:51,430 --> 00:27:52,430 complaints. 969 00:27:59,120 --> 00:28:00,679 This is one reason the commission 970 00:28:00,680 --> 00:28:02,749 never really regulated gas 971 00:28:02,750 --> 00:28:04,369 like it did for oil. 972 00:28:04,370 --> 00:28:06,799 Oversight of gas was 973 00:28:06,800 --> 00:28:08,029 basically outsourced to the 974 00:28:08,030 --> 00:28:08,629 pipelines. 975 00:28:08,630 --> 00:28:09,649 And that's going to come back to 976 00:28:09,650 --> 00:28:11,390 haunt us later in this story. 977 00:28:14,480 --> 00:28:16,189 So maybe they fumbled the ball with 978 00:28:16,190 --> 00:28:17,269 gas. 979 00:28:17,270 --> 00:28:19,219 But, boy, were they on top 980 00:28:19,220 --> 00:28:19,909 of oil. 981 00:28:19,910 --> 00:28:21,289 They were killing. 982 00:28:21,290 --> 00:28:22,669 It. Essentially, the Railroad 983 00:28:22,670 --> 00:28:24,919 Commission was the most important 984 00:28:24,920 --> 00:28:26,749 institution in the world of 985 00:28:26,750 --> 00:28:27,169 oil. 986 00:28:27,170 --> 00:28:28,499 Here's David Prindle again. 987 00:28:28,500 --> 00:28:31,159 And since oil was so important to 988 00:28:31,160 --> 00:28:33,019 the American economy, you could 989 00:28:33,020 --> 00:28:34,219 make a case that the Railroad 990 00:28:34,220 --> 00:28:35,689 Commission was the most important 991 00:28:35,690 --> 00:28:37,369 governmental institution in the 992 00:28:37,370 --> 00:28:39,319 United States, at least in regard 993 00:28:39,320 --> 00:28:40,129 to the economy. 994 00:28:40,130 --> 00:28:41,449 You could even say it was one of the 995 00:28:41,450 --> 00:28:43,099 most important agencies in the 996 00:28:43,100 --> 00:28:44,929 world, at least as 997 00:28:44,930 --> 00:28:46,849 far as it influenced the price of 998 00:28:46,850 --> 00:28:47,869 oil around the world. 999 00:28:47,870 --> 00:28:49,729 Because if it had 1000 00:28:49,730 --> 00:28:51,679 taken its thumb off the spigot, as 1001 00:28:51,680 --> 00:28:53,509 it were, Texas would have flooded 1002 00:28:53,510 --> 00:28:54,799 the oil market. 1003 00:28:54,800 --> 00:28:56,869 And there being so much supply, the 1004 00:28:56,870 --> 00:28:58,429 price would have gone down. 1005 00:28:58,430 --> 00:29:00,049 Other countries took notice. 1006 00:29:00,050 --> 00:29:01,639 They wanted the same control over 1007 00:29:01,640 --> 00:29:03,199 their oil fields. 1008 00:29:03,200 --> 00:29:04,849 And soon after the end of World War 1009 00:29:04,850 --> 00:29:06,529 Two, Jacques Bommel, the guy from 1010 00:29:06,530 --> 00:29:08,299 the Railroad Commission, went down 1011 00:29:08,300 --> 00:29:10,159 to Venezuela to start showing them 1012 00:29:10,160 --> 00:29:10,999 how. 1013 00:29:11,000 --> 00:29:13,399 They wanted to set up a railroad 1014 00:29:13,400 --> 00:29:14,969 there, just exactly like we have 1015 00:29:14,970 --> 00:29:15,859 here. 1016 00:29:15,860 --> 00:29:17,929 And like we said, 1017 00:29:17,930 --> 00:29:19,999 Texas influence over oil 1018 00:29:20,000 --> 00:29:21,949 was not just economically 1019 00:29:21,950 --> 00:29:22,969 important. 1020 00:29:22,970 --> 00:29:25,039 It became strategically 1021 00:29:25,040 --> 00:29:26,040 indispensable. 1022 00:29:29,370 --> 00:29:32,069 Into Egypt's Sinai Peninsula 1023 00:29:32,070 --> 00:29:33,719 a barren stretch of dunes, plateaus 1024 00:29:33,720 --> 00:29:35,129 and lifeless mountains. 1025 00:29:35,130 --> 00:29:36,989 Roll the spearheads of an Israeli 1026 00:29:36,990 --> 00:29:38,339 army of 50,000. 1027 00:29:38,340 --> 00:29:40,289 In 1956, there was a big fight 1028 00:29:40,290 --> 00:29:42,059 over the Suez Canal that disrupted 1029 00:29:42,060 --> 00:29:43,439 the flow of crude oil from the 1030 00:29:43,440 --> 00:29:44,309 Middle East. 1031 00:29:44,310 --> 00:29:46,289 So when oil from the Middle 1032 00:29:46,290 --> 00:29:47,909 East stopped coming, the railroad 1033 00:29:47,910 --> 00:29:51,009 commission just took the lid off. 1034 00:29:51,010 --> 00:29:53,079 And allowed Texas wells 1035 00:29:53,080 --> 00:29:54,549 to produce more. 1036 00:29:54,550 --> 00:29:56,319 And so there was no crisis. 1037 00:29:56,320 --> 00:29:58,269 About ten years later, the six day 1038 00:29:58,270 --> 00:30:00,789 war between Egypt, Syria and Israel 1039 00:30:00,790 --> 00:30:02,889 again shook global 1040 00:30:02,890 --> 00:30:03,459 supply. 1041 00:30:03,460 --> 00:30:05,379 War in the Middle East. 1042 00:30:05,380 --> 00:30:07,239 Israeli forces drive spearheads 1043 00:30:07,240 --> 00:30:09,039 across the Sinai Peninsula. 1044 00:30:09,040 --> 00:30:10,689 Again, the Rhetoric commission 1045 00:30:10,690 --> 00:30:11,559 reacted. 1046 00:30:11,560 --> 00:30:13,449 They take their thumb 1047 00:30:13,450 --> 00:30:15,249 off the spigot for a while and 1048 00:30:15,250 --> 00:30:16,629 produce more oil. 1049 00:30:16,630 --> 00:30:19,389 Then that war stops. 1050 00:30:19,390 --> 00:30:20,589 Things more or less go back to 1051 00:30:20,590 --> 00:30:22,359 normal. They put the thumb back on 1052 00:30:22,360 --> 00:30:24,249 the spigot and try 1053 00:30:24,250 --> 00:30:26,139 and keep everything 1054 00:30:26,140 --> 00:30:27,759 more or less stable. 1055 00:30:27,760 --> 00:30:29,829 This ability to manage global supply 1056 00:30:29,830 --> 00:30:32,139 is the reason the 50s and 60s 1057 00:30:32,140 --> 00:30:33,969 have been called the power years 1058 00:30:33,970 --> 00:30:35,499 of the Texas Railroad Commission. 1059 00:30:35,500 --> 00:30:37,509 It was the height of the agency's 1060 00:30:37,510 --> 00:30:38,409 influence. 1061 00:30:38,410 --> 00:30:40,359 But it would not last. 1062 00:30:40,360 --> 00:30:43,089 It turns out Jack Bombshell's 1948 1063 00:30:43,090 --> 00:30:45,309 visit to Venezuela was not 1064 00:30:45,310 --> 00:30:46,929 his only trip down there. 1065 00:30:46,930 --> 00:30:48,789 He actually went back again in 1066 00:30:48,790 --> 00:30:50,799 the 50s to keep training 1067 00:30:50,800 --> 00:30:52,749 people about the Texas way 1068 00:30:52,750 --> 00:30:54,339 of controlling oil production. 1069 00:30:54,340 --> 00:30:55,809 During this time, oil demand in the 1070 00:30:55,810 --> 00:30:57,789 U.S. was surging and more 1071 00:30:57,790 --> 00:30:59,259 oil fields were being opened up in 1072 00:30:59,260 --> 00:31:00,819 the Middle East by big oil 1073 00:31:00,820 --> 00:31:01,509 companies. 1074 00:31:01,510 --> 00:31:02,679 It's interesting, but one reason 1075 00:31:02,680 --> 00:31:03,519 Prindle says a lot of these 1076 00:31:03,520 --> 00:31:05,199 companies were going over there is 1077 00:31:05,200 --> 00:31:07,029 because it got them away from 1078 00:31:07,030 --> 00:31:09,549 the pesky Texas regulators. 1079 00:31:09,550 --> 00:31:11,619 There was always resentment 1080 00:31:11,620 --> 00:31:13,509 by the big integrated 1081 00:31:13,510 --> 00:31:15,099 corporations that the Railroad 1082 00:31:15,100 --> 00:31:17,139 Commission was making 1083 00:31:17,140 --> 00:31:20,169 rules that favored the small guys. 1084 00:31:20,170 --> 00:31:22,329 And that's what caused them 1085 00:31:22,330 --> 00:31:24,309 to turn so strongly toward 1086 00:31:24,310 --> 00:31:26,049 importing cheap oil. 1087 00:31:26,050 --> 00:31:27,849 This rise in global oil production 1088 00:31:27,850 --> 00:31:29,679 and imports threatens smaller U.S. 1089 00:31:29,680 --> 00:31:31,329 companies with lower prices. 1090 00:31:31,330 --> 00:31:33,219 So in the 50s, U.S. 1091 00:31:33,220 --> 00:31:35,409 producers got a law passed 1092 00:31:35,410 --> 00:31:37,419 limiting oil imports from most 1093 00:31:37,420 --> 00:31:38,559 countries. 1094 00:31:38,560 --> 00:31:40,119 And it turns out Venezuela, the 1095 00:31:40,120 --> 00:31:41,889 country that had done more than any 1096 00:31:41,890 --> 00:31:43,809 other country to learn the Texas way 1097 00:31:43,810 --> 00:31:45,639 of controlling supply was one 1098 00:31:45,640 --> 00:31:47,619 of the country's most hurt by these 1099 00:31:47,620 --> 00:31:48,789 new trade laws. 1100 00:31:48,790 --> 00:31:51,369 First, the Venezuelan oil minister 1101 00:31:51,370 --> 00:31:53,109 hoped he could patch things up with 1102 00:31:53,110 --> 00:31:54,399 the states he went to Washington to 1103 00:31:54,400 --> 00:31:56,199 pitch a partnership between 1104 00:31:56,200 --> 00:31:58,659 countries, kind of an international 1105 00:31:58,660 --> 00:32:00,159 railroad commission that would let 1106 00:32:00,160 --> 00:32:02,589 them regulate supply together. 1107 00:32:02,590 --> 00:32:04,179 But the U.S. government had no 1108 00:32:04,180 --> 00:32:05,019 interest in that. 1109 00:32:05,020 --> 00:32:06,489 I mean, why share the power? 1110 00:32:06,490 --> 00:32:08,349 So the Venezuelan oil minister paid 1111 00:32:08,350 --> 00:32:10,089 a visit to the Middle East looking 1112 00:32:10,090 --> 00:32:11,949 for a more sympathetic. 1113 00:32:11,950 --> 00:32:13,899 Audience, an OPEC, 1114 00:32:13,900 --> 00:32:15,819 the Organization of Petroleum 1115 00:32:15,820 --> 00:32:17,769 Exporting Countries, was born. 1116 00:32:17,770 --> 00:32:20,049 OPEC was explicitly modeled 1117 00:32:20,050 --> 00:32:21,549 on the Texas Railroad Commission. 1118 00:32:21,550 --> 00:32:23,319 At first, the birth of this young 1119 00:32:23,320 --> 00:32:25,599 upstart oil cartel 1120 00:32:25,600 --> 00:32:27,489 didn't really concern federal 1121 00:32:27,490 --> 00:32:29,619 and Texas energy officials 1122 00:32:29,620 --> 00:32:30,459 too much. 1123 00:32:30,460 --> 00:32:31,989 The U.S. still had the capacity to 1124 00:32:31,990 --> 00:32:33,909 flood the market if needed. 1125 00:32:33,910 --> 00:32:35,559 It could still produce or withhold 1126 00:32:35,560 --> 00:32:37,509 enough oil to set prices. 1127 00:32:37,510 --> 00:32:38,589 You know, the way they kept the 1128 00:32:38,590 --> 00:32:40,659 price of oil steady is 1129 00:32:40,660 --> 00:32:42,429 they say, well, here's how much you 1130 00:32:42,430 --> 00:32:44,139 can produce in this well, 1131 00:32:44,140 --> 00:32:46,329 theoretically, and you can produce 1132 00:32:46,330 --> 00:32:48,129 30%. That's what you can do next 1133 00:32:48,130 --> 00:32:48,489 month. 1134 00:32:48,490 --> 00:32:50,379 But as demand grew, the U.S. 1135 00:32:50,380 --> 00:32:52,209 started importing more oil again. 1136 00:32:52,210 --> 00:32:54,069 And as the global supply 1137 00:32:54,070 --> 00:32:55,989 of oil grew, the Texas 1138 00:32:55,990 --> 00:32:58,119 share of that market shrunk. 1139 00:32:58,120 --> 00:32:59,829 The allowable sales that the 1140 00:32:59,830 --> 00:33:02,259 Railroad commission is permitting 1141 00:33:02,260 --> 00:33:03,819 starts going up and up and up. 1142 00:33:03,820 --> 00:33:04,989 They figured they needed to let 1143 00:33:04,990 --> 00:33:06,969 Texas companies pump more to keep 1144 00:33:06,970 --> 00:33:08,409 a grip on the oil market. 1145 00:33:08,410 --> 00:33:09,789 They keep raising the allowable. 1146 00:33:09,790 --> 00:33:11,139 70% to 80%. 1147 00:33:11,140 --> 00:33:12,789 Of course, there's a point at which 1148 00:33:12,790 --> 00:33:14,569 this strategy stops working. 1149 00:33:14,570 --> 00:33:16,509 That point was reached 1150 00:33:16,510 --> 00:33:17,979 in 1972. 1151 00:33:17,980 --> 00:33:19,389 The amount they allowed the 1152 00:33:19,390 --> 00:33:21,279 allowable for each well went 1153 00:33:21,280 --> 00:33:22,280 to 100%. 1154 00:33:23,710 --> 00:33:25,299 With no more reserves to withhold. 1155 00:33:25,300 --> 00:33:27,219 No extra capacity to use to 1156 00:33:27,220 --> 00:33:28,539 manipulate prices. 1157 00:33:28,540 --> 00:33:30,369 The Railroad commission lost its 1158 00:33:30,370 --> 00:33:32,619 power over the world of oil. 1159 00:33:32,620 --> 00:33:34,719 So the glory days 1160 00:33:34,720 --> 00:33:36,129 of the Railroad Commission, when it 1161 00:33:36,130 --> 00:33:38,019 was truly, hugely important 1162 00:33:38,020 --> 00:33:40,509 in the economy of the country, ended 1163 00:33:40,510 --> 00:33:41,829 in 1972. 1164 00:33:43,330 --> 00:33:45,249 And soon after that, a new 1165 00:33:45,250 --> 00:33:46,959 power emerged. 1166 00:33:46,960 --> 00:33:49,509 OPEC, a group modeled explicitly 1167 00:33:49,510 --> 00:33:51,519 on this weird state railroad 1168 00:33:51,520 --> 00:33:53,379 agency in Austin, 1169 00:33:53,380 --> 00:33:55,269 came to manage the global 1170 00:33:55,270 --> 00:33:57,339 supply of oil. 1171 00:33:57,340 --> 00:33:58,899 That would send a shock wave through 1172 00:33:58,900 --> 00:34:01,449 Texas and the whole U.S. 1173 00:34:01,450 --> 00:34:03,279 that ended up changing the energy we 1174 00:34:03,280 --> 00:34:05,289 use, how much we pay for 1175 00:34:05,290 --> 00:34:07,899 it, and who calls 1176 00:34:07,900 --> 00:34:08,900 the shots. 1177 00:34:16,429 --> 00:34:18,259 Next time on the disconnect, the 1178 00:34:18,260 --> 00:34:21,138 energy crisis, deregulation, 1179 00:34:21,139 --> 00:34:23,089 and what happens when Texans 1180 00:34:23,090 --> 00:34:24,859 tell the Railroad Commission the 1181 00:34:24,860 --> 00:34:26,988 bills are too damn 1182 00:34:26,989 --> 00:34:27,989 high. 1183 00:34:30,290 --> 00:34:32,149 This episode was reported by me 1184 00:34:32,150 --> 00:34:34,158 and produced by Audrey McGlinchey, 1185 00:34:34,159 --> 00:34:35,749 Matt Largey and myself. 1186 00:34:35,750 --> 00:34:37,339 We had technical support from Renee 1187 00:34:37,340 --> 00:34:39,319 Chavez and Jake Perlman. 1188 00:34:39,320 --> 00:34:40,939 Thanks to Jimmy Moss and Andrew 1189 00:34:40,940 --> 00:34:42,769 Weber for their old timey voice 1190 00:34:42,770 --> 00:34:43,649 acting. 1191 00:34:43,650 --> 00:34:45,019 I say, Do you have a name for your 1192 00:34:45,020 --> 00:34:45,888 headquarters? 1193 00:34:45,889 --> 00:34:47,809 Thanks again to the Digital Archives 1194 00:34:47,810 --> 00:34:49,579 of the East Texas Research Center at 1195 00:34:49,580 --> 00:34:51,289 Steven Austin University for 1196 00:34:51,290 --> 00:34:52,459 archival tape. 1197 00:34:52,460 --> 00:34:54,109 All of this reporting can only be 1198 00:34:54,110 --> 00:34:55,669 done thanks to support from our 1199 00:34:55,670 --> 00:34:57,499 listeners. You can help to go 1200 00:34:57,500 --> 00:34:59,689 to support this podcast.org 1201 00:34:59,690 --> 00:35:01,429 to chip in whatever you can. 1202 00:35:01,430 --> 00:35:02,869 The disconnect is a production of 1203 00:35:02,870 --> 00:35:05,269 Cut and Tech Studios in Austin. 1204 00:35:05,270 --> 00:35:06,559 I'm Mose Buchele. 1205 00:35:06,560 --> 00:35:07,560 See you next time.