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Texas Company

TEXAS COMPANY


The Texas Company was founded during the early boom years of the Texas oil industry. In 1901 a gusher at the Spindletop oil field sent hundreds of entrepreneurs into Beaumont, Texas. Pumping out as much as 100,000 barrels a day, the Spindletop wells led to the rapid establishment of over 200 oil companies. Among the entrepreneurs who came to Texas was Joseph S. "Buckskin Joe" Cullinan, an oilman who had begun his career working for Standard Oil Company in Pennsylvania. Cullinan saw an opportunity in purchasing the crude oil for resale to refineries. With the help of New York investment manager Arnold Schlaet, he formed the Texas Fuel Company with an initial stock of $50,000. Cullinan and Schlaet began soliciting additional investors in New York and Chicago. After raising three million dollars, they reorganized their venture as the Texas Company.

Cullinan immediately began construction on a pipeline between Spindletop and the gulf coast of Texas. He built a refinery at the Texas coastal city of Port Arthur, and from there the company shipped its oil to Louisiana sugar planters, who used it to heat their boilers. In the fall of 1902 salt water leaked into the Spindletop wells, ruining many of the companies based there. The Texas Company survived with a timely discovery of oil at Sour Lake, 20 miles northwest of Spindletop. Other oil strikes soon followed in Oklahoma and Louisiana.

With Cullinan's oil expertise and the financing of his New York backers, the Texas Company soon became one of the nation's most prominent oil companies. Cullinan continued to drill wells in the southwest region, building more pipelines to connect them with Port Arthur. By 1908 the company was selling oil to all but five western states, and by 1913 its assets were worth $60 million. The nickname "Texaco" came from the cable address of the company's New York offices. "Texaco" gained popularity as a product name and in 1906 the company registered it as a trademark. The well-known logo first appeared in 1909 as a red star with a green "T" in the center.

At the time of the Texas Company's founding, oil was used primarily for lighting and as fuel for factories and locomotives. The Texas Company met this demand with its first consumer product, Familylite Illuminating Oil, introduced in 1907. After 1910, however, the automobile revolutionized the oil industry. Demand for gasoline, formerly considered a waste byproduct of kerosene, expanded rapidly. The Texas Company followed this trend and by 1914 its gasoline production surpassed that of kerosene. The company went from distributing gasoline in barrels to underground tanks to curbside pumps, and in 1911 it opened its first filling station in Brooklyn, New York. By 1916 57 such stations were in operation across the country. Powered by the growth of the automobile industry and the high demand for petroleum created by World War I (191418), the Texas Company quadrupled its assets between 1914 and 1920.

After World War I the Texas Company continued to concentrate on its automotive gasoline and oil production by introducing new products and expanding its national sales network. In 1920 two researchers at the company's Port Arthur refinery developed the oil industry's first continuous thermal cracking process for making gasoline. Named after its founders, the Holmes-Manley process greatly increased the speed of the refining process as well as the amount of gasoline that could be refined from a barrel of crude. The Texas Company marketed this gasoline through its retail network, pushing into the Rocky Mountain region between 1920 and 1926 and into West Coast markets in 1928, with the acquisition of the California Petroleum Company.

Products introduced during the 1920s included the company's first premium gasoline as well as Texaco Aviation Gasoline and automobile motor oils. To market the lighter oils it refined from Texas crude, the Texas Company launched its first nationwide advertising campaign. The slogan "Clean, Clear, Golden" appeared at the company's filling stations, which displayed its motor oils in glass bottles. By 1928 the Texas Company owned or leased more than 4,000 stations in all 48 states.

The company's growth was also reflected in its corporate structure. Finding Texas's corporation laws too restrictive for doing business on such a large scale, the Texas Company decided to move its legal home. In 1926 it formed the Texas Corporation in Delaware, which then bought out the stock of the Texas Company and reorganized it as a subsidiary called the Texas Company of Delaware. The company also moved their headquarters from Houston to New York. The Texas Corporation acted as a holding company for the Texas Company of Delaware and the Texas Company of Californiaformerly the California Petroleum Companyuntil 1941, when it merged with both to form a single company known as the Texas Company.

The Texas Corporation's earnings reached an all-time high in 1929, but they dropped precipitously after the stock market crash in October of that same year. Overproduction, economic recession, and low prices plagued the oil industry in the early 1930s. The company embarked on a strategy of introducing new products to stimulate demand. Texaco Fire Chief Gasoline was launched in 1932 and the company advertised it by sponsoring a nationwide Ed Wynn radio program. Havoline Wax Free Motor Oil, developed after the acquisition of the Indiana Refining Company in 1931, followed two years later and by 1934 it halted the Texas Corporation's losses. In 1938 the Texas Corporation introduced Texaco Sky Chief premium gasoline and also began promoting its Registered Rest Rooms program, assuring motorists that their service stations were "Clean across the Country."

The entry of the United States into World War II (193945) brought dramatic changes for the Texas Company. About 30 percent of its wartime production went to the war effort, primarily in the form of aviation fuels, gasoline, and petrochemicals. The company worked closely with Harold L. Ickes, federal petroleum administrator for the war effort, who organized the nation's oil companies into several nonprofit operations. The Texas Pipe Line Company, a subsidiary, oversaw the completion of two federally sponsored pipelines from Texas to the East Coast. The Texas Company also joined War Emergency Tankers Inc., which operated a collective tanker fleet for the War Shipping Administration. Another such venture was the Neches Butane Products Company, which manufactured butadiene, an essential ingredient in synthetic rubber. This enterprise gave the Texas Company its start in the infant petrochemicals industry.

With the end of World War II the Texas Company faced renewed customer demand at home. In 1947 U.S. consumption of oil exceeded its production for the first time; the company reacted by tapping new foreign sources for its crude oil. The Texas Company formed the Trans-Arabian Pipe Line Company with three other oil companies to build a pipeline connecting Saudi Arabia's oil fields with the eastern Mediterranean.

In 1959 the Texas Company changed its name to Texaco Inc., formally taking on its longtime nickname. By the end of the twentieth century Texaco was one of the world's largest oil companies, with exploratory, manufacturing, and marketing operations located around the globe.

See also: Exxon, Andrew Mellon, Petroleum Industry, Standard Oil


FURTHER READING

Ackerman, Laurence D. "Texaco: One Brand, Many Markets." Management Review, September 1991.

Folmer, L. W. Reaching for a Star: Experiences in the International Oil Business. Austin, TX: L. W. Folmer, 1993.

James, Marquis. The Texaco Story: The First Fifty Years, 19021952. New York: Texas Company, 1953.

Shannon, James. Texaco and the $10 Billion Jury. Englewood Cliffs, NJ: Prentice Hall, 1988.

Texaco, Inc. Texaco Today: The Spirit of the Star, 19021992. White Plains, NY: Texaco Inc., 1992.

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