Bryan Burrough

by The Big Rich: The Rise;Fall of the Greatest Texas Oil Fortunes

  The Inch pipelines, however, did not enjoy unanimous support. A number of competing proposals sprang up that spring. As a stopgap measure, the government studied ways to get oil across Florida, which would at least avoid the shipping lanes south of Miami. A Florida group pushed for an eighty-million-dollar canal; tanks of oil could be floated across in barges. Parten thought of something cheaper. He remembered one of Clint Murchison’s East Texas pipelines that had been used to funnel hot oil during the Depression but had fallen into disuse. Parten telephoned Murchison’s office and asked whether the pipe could be dug up and reassembled across northern Florida. Murchison’s men were at work in no time. Their new pipeline would ship its first oil in June 1943.

  The issue of a Texas-to-East-Coast pipeline, however, remained up in the air. In June 1942 a House committee recommended building a 580-mile pipeline from the Tinsley oil field in Mississippi to Charleston or Savannah. To Parten’s dismay, the bill passed. This new initiative, Parten realized, represented a dangerous alliance between several opponents to the Inch lines, not only politicians from South Carolina and Florida, but a man Parten had first met twenty years earlier when he was running an Arkansas gambling house: H. L. Hunt. It was Hunt and his son Hassie who controlled most of the Tinsley Field, an area Parten knew was already in decline; a pipeline linking it to East Coast ports would allow the Hunts to reach market, but it wouldn’t make a dent in demand.

  Parten discovered that the Tinsley pipeline was the first stage in what Hunt and his partners envisioned to be an even longer pipeline originating in Wichita Falls. Parten had already vetoed both ideas, even after one of Hunt’s partners warned he would face “a great deal of political heat.” The matter came to a head at a hearing in late June, where those testifying on behalf of Hunt’s pipeline included, of all people, Hassie Hunt, whose job advising the Chinese government consisted mostly of laying around the Mayflower Hotel and chasing girls. The Hunts and their allies had their say, but in the end an army report favoring the Texas-to-Philadelphia route won out.

  To build it, Parten hired a Texaco pipeline man named Bert Hull. Hull quickly assembled an army of fifteen thousand grizzled roughnecks. They worked in four groups, one each on eastern and western sections of both pipelines. It was a monumental task. Thousands of miles of American countryside had to be surveyed and cleared; tunnels had to be bored beneath the Mississippi and two hundred other rivers, streams, and lakes; almost three thousand miles of four-foot trenches had to be dug. Hull’s crews laid the first pipe on August 3, 1942. Massive trucks delivered forty-foot sections of pipe to the crews around the clock; each section weighed two tons, and each had to be welded, sunk in the ground, and buried. On a good day, nine miles of pipe disappeared into the earth.

  That winter, floods washed away entire sections of pipe waiting to be laid at the Mississippi and Arkansas Rivers. At the Mississippi, Hull’s men managed to pull tons of pipe from the river mud and have it back in place in just two days. The Arkansas River damage took longer, forcing crews to stow seven miles of pipe in the streets of Little Rock. By January 1943, after barely six months of work, Hull’s men had finished the initial 531 miles of the Big Inch. In February, as crews furiously worked to finish the rest, the first shipment of Texas oil flowed through the line to Norris City, Illinois, where more than a thousand railroad cars waited to take it east. Six months later the entire line was completed, and the first oil flowed from East Texas into the Sun Oil refineries at Marcus Hook, Pennsylvania. It was the world’s longest pipeline, an extraordinary engineering achievement.

  When the war was finally won, American oil was among the heroes. The Allies, it was said, “floated to victory on a sea of oil,” and by and large it was Texas Oil, a good deal of it owned by the Big Four families. Between 1941 and 1945 the Axis powers produced an estimated 276 million barrels; in the same time span, Texas produced more than 500 million, 100 million from Hunt’s East Texas fields alone. As Axis leaders acknowledged, they couldn’t compete with the Allies’ supply of aviation fuel and gasoline. “This is a war of engines and octanes,” Joseph Stalin said in a toast to Winston Churchill in Moscow. “I drink to the American auto industry and the American oil industry.”

  If the Inch lines helped win the war for the Allies, they would win the peace for Texas Oil. When the federal government began auctioning off sixteen billion dollars of wartime factories and industrial assets in 1945, the two pipelines became the focus of intense speculation. Everyone had an idea what should be done with them. The most innovative suggested converting them for use transporting a product that for decades oilmen had simply thrown away: natural gas. A methane-rich vapor found in most oil and coal deposits, gas had been identified as early as 1683. Gas lighting had been used in British factories since the early 1800s, and while some American cities began using gas streetlamps after the Civil War, it had never been widely accepted as an alternative to traditional heating oils. Well into the 1940s American oilmen burned off more natural gas—a process called “flaring”—than the entire country saw fit to use. An oil scout cruising West Texas one night in 1945 wrote that it felt like driving through a city—thousands of gas flares lighting the night sky for miles around. One town, Denver City, out near the New Mexico border, was wreathed with so many flares it didn’t use streetlights for years.1

  But, as happened after World War I, American energy demand soared after World War II, bringing yet another round of gasoline shortages. A new oil-drilling boom was soon under way. But by early 1946, when the Inch lines were put up for auction, there were already widespread calls, in Congress and elsewhere, that the nation’s electrical utilities convert at least some of their plants to natural gas. Consumer advocates, realizing that gas could be much cheaper than oil, saw the future of home-heating and appliances. Texas Oil saw the future of its profits. The specter of one of its waste products heating all of Boston and New York and Philadelphia, and having it pumped directly there via an existing pipeline—it was the kind of treasure not seen since Spindletop or the East Texas field. Every major oilman in Texas began looking for ways to get his hands on the Inch lines.

  Hunt joined one bidding syndicate, Murchison and Richardson another. Their bids, along with fourteen others, arrived in Washington that summer. The government needed more time to value the pipelines, so a second round of bidding was set for February 1947. In the interim, a new company, Tennessee Gas, was allowed to lease the lines, proving they could safely transport gas. When the final offers were opened, the winner, with a bid of $143 million, was a Houston group led by Lyndon Johnson’s main financial backers, George and Herman Brown. They called their company Texas Eastern, and their goal was bringing Texas natural gas to the cities of the Northeast.

  Within weeks utilities in Philadelphia, New York, and Boston announced widespread conversions to natural gas. The first Texas gas flowed through the new Texas Eastern-owned Inch lines into Philadelphia’s Tilghman Street Gas Plant in September 1948. Even as other southwestern groups announced plans to build competing pipelines, Texas Eastern moved into New York. On August 17, 1949, the mayor of New York City, William O’Dwyer, stood in a Consolidated Edison plant on the north shore of Staten Island. When a worker nodded his head, the mayor twisted a valve, releasing the first whiffs of Texas natural gas into a storage tank, where it was soon put to use warming apartments on Park Avenue and cooking meat loafs in Sheepshead Bay.

  It was the beginning of a new era. Across America thousands of homeowners switched to cleaner, cheaper gas furnaces and appliances. Between 1945 and 1951, gas sales nationwide doubled. Everywhere, new pipelines were laid; one of the largest, the so-called Bigger Inch line built by El Paso Natural Gas, brought Texas gas to the burgeoning suburbs of Southern California, which quickly became the nation’s single largest gas market. For Texas oilmen profits were stupendous. The men who bought Texas Eastern saw their stock, bought for $150,000, leap in value to almost $10 million in less than a year. H. L. Hunt’s fields alone supplied a full quarter
of the gas Texas Eastern brought to northeastern cities. Sid Richardson’s Winkler County fields became the foundation of El Paso Natural Gas’s supply; Richardson’s gas lit up much of Hollywood and the Sunset Strip. For Hunt and Richardson, and for scores of other oilmen, it was found money.

  And not a moment too soon.

  II.

  At mid-century America was the acknowledged king of oil-producing countries, pumping 63 percent of the world supply in 1941, and Texas was its prince, leading all states in production year after year. At the height of war in 1943 came the first hint of a serious challenge to these crowns. It rose in a land of desert nomads most Texans knew only from the tales of Sinbad: Arabia. Harold Ickes heard about it first. As the nation’s wartime petroleum czar, Ickes spent the war worrying that America would run out of oil. In his search for more, he had his men study every corner of the globe, and as they did, they read of a smattering of small discoveries in the Persian Gulf, in some kind of sheikhdom called Bahrain in 1932, in something called Kuwait six years later. British crews had actually managed to fill an entire tanker with Arab oil in 1939, and three years later, as Erwin Rommel’s Panzers rumbled into Egypt, Ickes decided it was time to find out how much lay in Rommel’s path. This called for a mission of the utmost secrecy, for which Ickes selected a most unusual Texas oilman, Everette DeGolyer.

  DeGolyer wasn’t an actual Texan—he was raised in Oklahoma—and he wasn’t an actual oilman. He was a geophysicist, probably the world’s best. Short and rumpled, with an enormous head and roving intellect—in later years he purchased the Saturday Review—DeGolyer made his name while still an undergraduate at the University of Oklahoma in 1910, bringing in a gusher that inaugurated the golden age of Mexican oil. He had gone on to cofound the Amerada oil company, where he pioneered the use of the seismograph; colleagues kidded DeGolyer that he was “crazy with dynamite.” He had moved to Dallas in 1936 to start his own geophysical consulting firm, and by the time Ickes loaded him onto a cargo plane for the Persian Gulf in 1943, he was among the oil industry’s most respected voices.

  Hopscotching from Miami through the Caribbean, then onto Brazil and Africa, DeGolyer arrived in the Middle East to find a land bleaker than anything he had seen in West Texas. “In fact,” he wrote his wife midway through a tour of Saudi Arabia, Kuwait, and Bahrain, “Texas is a garden compared to some places we have been.” But the geology, DeGolyer discovered, was a thing of beauty. The more he studied it, the more excited he became. The petty sheikhdoms of the Persian Gulf, he realized between desert meals with menacing Bedouin, sat atop an ocean of oil that dwarfed anything the world had ever seen. By the time he returned to Washington, DeGolyer was certain he had glimpsed the future. A conservative man, he estimated the Persian Gulf’s reserves at twenty-five billion barrels—a guess that further studies drove as high as three hundred billion barrels. “The oil in this region,” a man who accompanied DeGolyer wrote, “is the greatest single prize in all history.”

  Great for the world; not so great for Texas. Projections by DeGolyer and others triggered tense talks between the American and British governments over just who would control Persian Gulf oil. At a White House meeting in February 1944, President Roosevelt showed Lord Halifax a map he had drawn of the Middle East. Persian oil, Roosevelt said, could remain British. The two countries would share anything found in Kuwait and Iraq. But Saudi Arabia, he continued, would be the exclusive province of major American oil companies. The Anglo-American Petroleum Agreement, signed six months later, essentially codified Roosevelt’s plan. As soon as the Nazis and Japanese surrendered, the majors would begin drilling.

  Independent oilmen, especially in Texas, howled. Why should the majors control the Middle East? They wanted in, too. When the new agreement came up for a Senate vote in 1945, Texas producers led the drive against it, forcing the White House to withdraw. By the time the treaty was reintroduced, Texans had realized the problem wasn’t the control of Middle Eastern oil but the competition. If the Persian Gulf held half as much oil as Everette DeGolyer thought, it would drive prices down sharply and, if imported, swamp Texas producers. In 1947 protests against the treaty erupted across the state. Even Texas schoolteachers threatened to go on strike if it passed. Again the treaty was withdrawn, but by then it was all but irrelevant.

  Once the war ended, there was no stopping the tsunami of Middle Eastern oil. Massive new fields were discovered, one every few months during 1947 and 1948; much of the oil initially went to fuel the rebuilding of war-torn Europe, but for oilmen who saw the future, the tidal wave was growing, and it was heading straight for Texas.

  III.

  Compared to the decades that bracketed it, the 1940s were comparatively quiet years for the Big Four families, a time of steady corporate and family growth. The war itself was very good for Texas, especially the men of Texas Oil. Dallas and Houston boomed. The demand for jet fuel and all manner of chemicals led to the building of dozens of new refineries and chemical plants along the coast south and east of Houston—“an unbroken ninety-mile line of refineries,” in one startled writer’s words, “like a single throbbing factory.” During the war a windfall-profits tax forced oilmen to plow every last cent of extra profit into the search for new reserves. The demand for oil skyrocketed, and when the fighting ended the postwar thirst for natural gas turned a waste product into Texas Oil’s new profit engine.

  Sid Richardson made a second fortune in gas, piping out billions of cubic feet of it along with millions of barrels of new oil from the amazing Ellenberger Lime in West Texas. In his new offices on the sixth floor of the Fort Worth National Bank Building, Richardson took the first steps toward forming a corporate organization, dividing his empire into halves, Texas and Louisiana. It was a munificent company. Out at the sprawling “Sid Richardson Oil” work camps in Winkler County, south of New Orleans, and at a new gas field near Eola, Louisiana, the supervisors all received Christmas gifts, while their children could look forward to something from “Uncle Sid” upon graduating high school. Once he returned from the war, Perry Bass kept things running smoothly, allowing Richardson to take long months at St. Joe’s, or at one of several resorts in Arizona where he spent the winters, betting on the ponies, playing cards, and berating Bass when the need arose.

  Unlike Clint Murchison, Richardson never seriously diversified. One of his few forays outside oil came in 1948, after he was outbid for the Inch lines. An oilman named Frank Andrews suggested he try to buy another soon-to-be-auctioned war asset, a factory in Odessa that was the world’s largest producer of carbon black, a sootlike oil by-product used in making tires. Richardson put pressure on Lyndon Johnson to intervene on his behalf and Johnson came through. For the bargain price of $4.3 million, Richardson took control of not only the plant but 447 other buildings on 426 acres of land, employee housing, and fifty miles of adjoining pipeline. Johnson then pressed the White House to have carbon black classified as a “critical material” for national security, driving up its price, and even arranged for the government to stockpile its excess inventories at the Odessa facility. When Richardson cut several deals with his competitors, the Department of Justice opened an antitrust investigation—until one of Johnson’s men intervened once more, killing the probe in its cradle.

  Once the purchase went through, Frank Andrews suggested that Richardson use the massive plant to leverage a better price for the natural gas he was selling El Paso Natural Gas. Richardson was getting two cents per million cubic feet. Andrews suggested he might be able to pry four cents out of El Paso by threatening to fuel the plant with a competitor’s gas. When the negotiation concluded, Richardson telephoned Andrews and, in his teasing way, hollered, “You’re a liar, Andrews! I didn’t get four cents.” Before Andrews could respond, Richardson delivered the punch line. “I got five!” he crowed.

  H. L. Hunt spent the war years drilling hundreds of new wells across Texas, Louisiana, and Mississippi, then branched east into Florida before turning west, snapping up leases in the R
ockies and Canada. Hunt liked to boast that Hunt Oil had produced more oil during the war than all the Axis powers combined, and while it wasn’t true, it was close. He bought dozens of new rigs, eventually sixty-five or more, and worked them around the clock, completing as many as three hundred new wells a year. Oil was harder to find outside Texas, but Hunt’s new son-in-law, Al Hill, urged him to hire his first geologists, and under their guidance Hunt Oil piled on massive new reserves. By 1946 the company was bringing in an estimated one million dollars a week in free cash flow. Hunt purchased a new refinery outside Tuscaloosa, Alabama, and began marketing his Parade brand gasoline in five southern states.

  Everything was run out of Hunt Oil’s new offices in the Mercantile Bank Building in downtown Dallas, where Hunt relocated in 1945. The headquarters staff remained small in those years, rarely more than a few dozen secretaries and bookkeepers. Working out of a corner office behind a large mahogany desk, Hunt was an unremarkable manager for his day, taciturn and impatient, never one to lavish compliments on his people; his only eccentricities were a penchant for singing gospel songs and a habit of taking off his shoes and socks and propping his bare feet on his desktop. Outside the office, Hunt was just another balding Texan in his fifties in a gray suit and fedora; as a man with three separate families now, it was no accident he avoided all publicity, refusing to join local boards or give to Dallas museums or charities. For the most part, Dallas returned the favor. In 1941, when Hunt applied to the exclusive Brook Hollow Country Club, he was turned down. A number of oilmen suffered the same fate. It would take many years, in fact, before Dallas became entirely comfortable with oil money.