The Industrial Economy of Southeast Texas – Past, Present, Future

The Industrial Economy of Southeast Texas – Past, Present, Future

The economy of Southeast Texas both depends and thrives on the industrial markets. This has been the case since the early 1900’s when oil was struck at the big hill at Spindletop. Since then the area has evolved and shifted its focus from drilling and production to become more of an epicenter for refining the energy sources. Southeast Texas’ colored history has seen periods of high growth as well as lulls and recessions but the resilience of the hard working labor force has always overcome to see better days. Let’s take a more in-depth look at the past, present and future of the industrial economy of Southeast Texas.

The Early Days

Right from the start Southeast Texas captured the attention of early settlers and explorers with its abundance of natural resources. The legendary Spanish conquistador Hernando De Soto is said to have sent his men out scavenging along the shores of Sabine Lake in 1543 to gather sun-hardened natural deposits of crude oil, which he then used to caulk the expedition’s boats, allowing them to continue their quest for treasure and adventure.

While the previous example is a colorful tale of the early and enduring importance of crude oil in the Southeast Texas Region, crude is by no means the only resource which had an impact on the area’s early economy. The vast piney woods located in what is now Hardin County were quickly recognized as an extremely valuable commodity and an early logging industry was established. Meanwhile the region also boasted a thriving ranching community and sustained early settlers with its rice crops.

Spindletop: The Beginning of A New Era

At the turn of the twentieth century, the nation, and the world at large, had discovered the massive potential benefits that existed in crude oil. However, up until that point oil wells had been fairly basic and low-yield. All of that changed on January 10th, 1901 in Beaumont, when Anthony F. Lucas set up an oil well on the Spindletop Salt Dome, just south of town.

The well immediately sprayed crude oil more than 160 feet into the air and was dubbed “The Lucas Gusher.” This marked the world’s first truly great oil well and inspired a revolution in the industry, eventually making Lucas a powerful oil magnate and establishing Beaumont as a bona fide oil boomtown as the population rose more than fivefold from 9,000 people prior to the 1901 gusher, to over 50,000 by 1902. Within the next couple of years the Spindletop quickly acquired almost 300 wells and supported nearly 600 individual oil companies.

The Golden Triangle Withstands The Great Depression

Shortly after the 1901 Spindletop gusher, the area of Southeast Texas between the cities of Beaumont, Port Arthur, and Orange began to be known as the Golden Triangle. This name reflected the wealth and thriving industry that the oil boom created. The region thrived well into the 1920s and the largest skyline between Houston and New Orleans sprang up in downtime Beaumont.

On Black Tuesday, October 29th, 1929 the US stock market crashed, initiating what would become known as the Great Depression. However, amazingly the economy of Southeast Texas was so strong by this point that the effects of the Great Depression were not truly felt by most citizens for a full two years after it had begun. Additionally, the people of the area pulled together and held strong throughout this uncertain period. In 1932 civic hero, Frank Yount, even paid the City of Beaumont’s payroll taxes out of his own pocket.

Southeast Texas Today – A Thriving Industrial Economy

The Southeast Texas region continued to grow and expand its industrial economy since those early days. Today the area has become one of the largest refining and petrochemical centers not just in the nation, but in the entire world. Texas as a whole has the second highest GDP in the nation, behind only California, and on an international scale if Texas were a sovereign nation it would have the 14th largest economy in the world by GDP. This bursting-at-the-seams economy is due in large part to the Southeast Texas region which is home to, or associated with, some of the largest companies in the nation.

A Modern, Industrial Mecca

Thanks to its rich natural resource and strong industrial infrastructure Southeast Texas serves as a kind of industrial Mecca for many of the biggest US companies. In fact most of the largest oil companies in the nation are associated with the area:

  • In 1901 Gulf Oil Company was founded in the area. This company later went on to become Chevron.
  • Humble Oil sold a 50% stake to Standard Oil of NJ to build a refinery in Baytown. In 1972 the two merged and were renamed Exxon, now ExxonMobil.
  • Magnolia Petroleum Company ran one of the largest refineries in the world in Beaumont. Eventually Magnolia sold 45% ownership to Standard Oil of NY and eventually the companies combined, becoming Mobil, now ExxonMobil.
  • The Texas Oil Company was founded in 1902 and went on to become Texaco, which is now owned by Chevron.

In addition to these major oil and gas companies, the Southeast Texas Region also features the very impressive Port of Beaumont. The port serves an an industrial hub, allowing the region to ship and receive oil, gas, petrochemicals, and industrial products. This port routinely ranks in the top five ports in the country in terms of the amount of tonnage it processes.

An Eye Toward The Future

While it is of course impossible to say exactly what the future will hold for Southeast Texas, some projections about its future can be made based on current trends. As the United States moves toward energy independence and the oil and gas boom continues to intensify, it seems obvious that Southeast Texas will continued to be buoyed by the industrial climate. The region’s plants and refineries are bustling and operating at high capacity, ready to take on whatever challenges lay ahead.

As we’ve discussed in previous articles, it is fabrication which makes much of the nation’s oil and gas boom possible and with so many state-of-the-art fabrication facilities located in Southeast Texas it is fair to say that the area will be supporting not just its own local oil and gas boom, but facilitating those of other areas throughout the country as well.

STI Group has also discussed the importance of the Jefferson Transload Railport, which we are pleased to be actively involved with. This facility creates an industrial hub which will combine the Port of Beaumont’s waterway access with high capacity railways and direct access to a land-based highway, allowing the region to thrive and prosper in relation to three different modes of distribution.

As a company STI Group is proud to call Southeast Texas home. We feel that the unique blend of natural and industrial resources, combined with a rich, and storied history and a culture of hard-working integrity have played a huge role in shaping the company into what it is today. Southeast Texas has a bright future ahead and STI Group is looking forward to being a part of it.


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