Essential Traits Defining a Thriving Town or City
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Modern U.S. boomtowns have a long history of being linked to the extraction of natural resources, with many towns flourishing due to the development of coal, oil, and natural gas. One such example is the current boom in oil and gas development, which has led to the rise of numerous boomtowns across the country.
A series of fact sheets, based on the "Maximizing the Gains of Old and New Energy Development for America's Rural Communities" project, summarizes research on the economic impacts related to energy development. The research identifies four stages in the oil and gas development process: initial exploration and land acquisition, drilling and construction of supporting infrastructure, drilling and filling in supporting supply chains, and the mature stage of production.
During the drilling and construction phase, communities experience an increase in construction activities and population. This phase accounts for 80% of oil and gas employment, with opportunities concentrated in oil and gas extraction, manufacturing, construction, and supporting services. The impact on community wealth generation is well documented, with examples like the recent oil and gas development in Ohio making more than 600 Ohioans millionaires (Downing, 2013).
In the third stage, communities experience additional investments in supportive supply chains and midstream development such as natural gas processing facilities. In the mature stage of production, economic activity is based on operations and maintenance jobs, as well as royalty payments connected to oil and gas production.
The history of U.S. boomtowns is deeply rooted in natural resource development, dating back to the 1849 gold rush. San Francisco emerged as the primary supply center during the gold rush and became the largest city west of the Mississippi. Similarly, many modern U.S. boomtowns, such as Taft, California and Beaumont, Texas, have been shaped by the oil and gas industry.
A study by Cummings and Schulze (1978) defines a boomtown as a community experiencing rapid growth due to a sudden economic shock. According to this definition, a boomtown is characterized by a large jump in population over a 5 to 12 year construction period. In the initial exploration/land acquisition stage of oil and gas development, communities and landowners experience an increase in activities related to property sales, lease agreements, and mineral rights contracts.
Researchers identify an increase in population, an increase in community and family wealth, and enhanced community economic performance as characteristics of an economic boom. Multiple studies point to the stimulating role of natural resource extraction in economic performance (Tsvetkova and Partridge, 2015). However, the economic fortunes of boomtowns are closely tied to volatile oil prices and discoveries, leading to cycles of prosperity and hardship.
For instance, Taft, California experienced a rapid transition from a railway siding to a bustling oil boomtown after oil was discovered in the Midway-Sunset Oil Field in 1909, attracting thousands of workers and companies and shaping the local economy for decades. Similarly, Beaumont, Texas, known as “Boomtown,” continues to benefit economically from oil and gas, with affordable living costs and diverse employment opportunities driven by large companies in the sector.
In conclusion, modern U.S. oil and gas boomtowns undergo rapid development stages tied to resource discovery and extraction, with economies heavily shaped by industry demands, employment influx, infrastructure expansion, housing market shifts, and vulnerability to global energy price trends.
- The increase in oil and gas development has not only led to job opportunities in oil and gas extraction, manufacturing, construction, and supporting services, but it has also significantly impacted the finance sector, with examples like the recent oil and gas development in Ohio making more than 600 Ohioans millionaires.
- Beyond the drilling and construction phase, the maturity of oil and gas production also has an impact on the finance industry, as economic activity is based on operations and maintenance jobs, as well as royalty payments connected to oil and gas production, which can provide steady income for communities and individuals.
