industryThen and now: 50 years of fueling the Texas economy

March 2026 | By Jess Donald and Brynne Harder

“Since the first gusher erupted at Spindletop in 1901, oil and gas have played a leading role in the state’s economy.”

Those words are as true today as they were when Fiscal Notes first published them in 1984. This publication has chronicled the state’s economy since 1975 with the belief that Texans have a right to know how it functions. In that 50-year history, few subjects have been featured as significantly as the ever-evolving oil and gas industry.

It is fitting that an early story published by the Comptroller’s office, “$7 Million Additional Revenue From Yates” in May 1976, focused on oil field revenues. The article detailed how unitization — pooling adjacent land parcels into a single legal entity to efficiently extract resources — could reverse a four-year production decline. At the time, revenue estimators predicted this move would bring an additional $7 million to $10 million in revenue to the state during the 1976-77 biennium.

That figure, significant at the time, pales in comparison to today’s reality. According to the Texas Oil & Gas Association’s 2025 Annual Energy and Economic Impact Report, the oil and gas industry, along with supporting industries such as pipeline manufacturing and logistics, paid a total of $27.0 billion in state and local taxes and royalties in 2025. While the industry’s scale has grown exponentially, the fundamental reality persists: The energy sector remains a critical pillar of the Texas economy. As we look at 50 years of Fiscal Notes coverage, we see exactly how innovation has sustained this vital industry.

Revolution: Technology and production

A June 1984 retrospective, “Energy Prices Help Fuel the Texas Economy,” followed the 1970s boom to a 1983 price decline. It noted that, at the time, 27 percent of the nation’s oil-related jobs were in Texas, making the state almost four times more dependent on the industry than the rest of the country.

As the state’s economy diversified, Fiscal Notes turned toward the innovations causing major industry shifts. There was no shortage of content — from the 1908 rotary drill bit to hydraulic fracturing. In the aftermath of the 1980s bust, the sector found a catalyst in technology.

In August 1990, the article “Horizontal drilling: Significant oil and gas production delivers mini-boom to South Texas” reported on a nascent technique, describing it as the “semiconductor revolution” of modern oil production. Horizontal drilling exposes significantly more productive rock than a vertical well, maximizing recovery. The article promised this could generate “hundreds of millions of dollars in the state economy.”

“The advent of horizontal drilling has been called the ‘semiconductor revolution’ of modern oil production, since it may reshape the industry as radically as the microchip did electronics.” – Horizontal drilling: Significant oil and gas production delivers mini-boom to South Texas, Fiscal Notes, August 1990

That prediction proved accurate. Today, the “revolution” is standard practice. A recent Fiscal Notes article, “Oil production on the rise as oil rigs decrease” (August 2025), highlights that because horizontal wells are so efficient, Texas has seen a massive divergence between equipment and output. From fiscal 2014 through 2024, the number of active oil rigs decreased by 65 percent, yet oil production increased by nearly 94 percent. Texas is the epicenter of this technology, home to 50.6 percent of all U.S. horizontal drilling rigs as of May 2025.

By producing record volume with fewer rigs than in the 1980s, the industry has proven it is more tech-driven than ever. The numbers speak for themselves: In 1976, Texas produced 1.15 billion barrels of crude oil, dipping to 336 million in 2007 before climbing to 1.73 billion barrels in 2024 (Exhibit 1).

Exhibit 1: Texas crude oil production in thousands of barrels (Mbbl), 1976-2024

Exhibit 1 data

Texas Crude Oil Production, 1976-2024

Year	Production (Mbbl)
1976	1,153,941
1977	1,101,137
1978	1,040,966
1979	978,544
1980	931,078
1981	897,573
1982	871,780
1983	849,072
1984	845,502
1985	830,597
1986	784,106
1987	725,029
1988	698,224
1989	650,514
1990	645,941
1991	646,776
1992	612,692
1993	574,568
1994	541,482
1995	511,962
1996	495,378
1997	488,860
1998	457,499
1999	406,815
2000	398,678
2001	378,849
2002	364,314
2003	357,240
2004	349,233
2005	344,226
2006	340,885
2007	336,222
2008	346,632
2009	344,527
2010	356,911
2011	393,880
2012	533,141
2013	703,119
2014	900,492
2015	1,004,774
2016	974,612
2017	1,026,765
2018	1,274,569
2019	1,545,919
2020	1,465,952
2021	1,453,101
2022	1,549,413
2023	1,663,332
2024	1,727,703

Natural gas pivot: From import to export

Perhaps no commodity illustrates the industry shift better than natural gas.

In 1994, Fiscal Notes noted that Texas was “the nation’s largest natural gas producing state.” That statement is still true today, with Texas accounting for 28 percent of national production in 2024. However, the commodity’s perceived value has evolved. The same 1994 issue noted that natural gas had been considered a “nuisance byproduct” in the early days of the oil business.

After “years of growing pains,” the industry matured. By 2004, an article titled “So Cool It’s Hot” detailed plans for the state’s first liquefied natural gas (LNG) facility in Freeport. “Texas is signed up for a crash course on big-time LNG facilities,” the article asserted. Notably, these facilities were originally conceived as import terminals to meet domestic shortages.

The narrative has shifted dramatically.

Thanks to an abundance of shale gas contributing to recent growth, Texas has transformed from a prospective importer into a key global LNG exporter, as illustrated in Fiscal Notes content from September 2024. While established terminals like Freeport LNG are actively shipping Texas gas to markets including Europe, the next wave of export capacity is underway with facilities such as Rio Grande LNG currently in development. The “nuisance” has become a premier geopolitical asset. In 2024, Texas natural gas production hit a record 12.62 trillion cubic feet, becoming an important asset for both the state’s power grid and its economy.

Economic impact: Funding the future

The industry’s effect on the state’s economy has also evolved. In February 1982, Fiscal Notes published “Energy: Rich State, Poor State,” detailing the friction between energy-producing Sunbelt states and consuming regions. The influx of revenue was vital but notoriously volatile.

Today, that volatility is managed with greater strategic foresight. Severance taxes have built the Economic Stabilization Fund (ESF) — or Rainy Day Fund — into a fiscal fortress. Established by constitutional amendment in 1988, the fund serves as a savings account primarily funded by oil and gas taxes and a safety net to keep the state fiscally sound during uncertain times.

As projected, the ESF reached its constitutional cap at the start of fiscal 2026, following a partial severance tax transfer. It will not receive further oil and gas funds in fiscal 2027. Importantly, the overflow also allows the Texas Legislature to make historic investments in water infrastructure, broadband and property tax relief. The “Rich State” isn’t just sitting on its wealth; it is investing in a diversified future.

Constant engine

Former Comptroller Susan Combs once wrote, “Texas is the envy of the nation thanks in no small part to the manufacturing, industrial, petrochemical, and oil and gas industries that form the backbone of our economy.”

Texas has successfully diversified, with thriving semiconductor manufacturing, biotechnology and aerospace sectors. Yet, the energy sector remains a constant engine helping to power that growth.

As Fiscal Notes surpasses the 50-year mark, the industry’s narrative is expanding beyond the sheer difficulty of extraction to the ingenuity of the resource itself — whether exported to stabilize global markets, recycled to preserve water resources or used to power the next generation of data centers. The tools change, and the numbers grow, but the Texas spirit of innovation remains the same.