Ernest O. Thompson, Texas railroad commissioner, was born in Alvord, Texas, on March 24, 1892, one of four surviving children of Lewis Oliver and Flora Lee Agnes (Murray) Thompson. He was living in Amarillo by 1902 and was a successful entrepreneur as a teenager. After taking an LL.B. degree at the University of Texas in 1917, Thompson served in World War I and became an expert in machine-gun tactics. In the Meuse-Argonne campaign, he worked out a mass machine-gun-fire technique and attained the rank of lieutenant colonel. He practiced law after the war and bought and managed the Amarillo Hotel. In 1923 he married May Peterson (see THOMPSON, MAY PETERSON), an opera singer. He was elected mayor of Amarillo in 1928 on a platform of cutting utility rates. Thompson's tactics-the establishment of a competing city gas company and a consumer boycott of telephones, for example-soon persuaded the companies to lower their rates. In 1932 Governor Ross S. Sterling appointed Thompson to the state Railroad Commission, which was charged with regulating the oil and gas industry, at a time of chaos and overproduction in the gigantic East Texas oilfield. In 1933–1934, as the dominant member of the commission, Thompson averted the destruction of the agency by the federal government twice and the state government once and began to establish order in the industry. Conservationists and the major oil companies received what they wanted most-a system of mandated oil-production levels known as prorationing. The commission determined the monthly "allowable" in accord with market demand, and the practice ensured both price-fixing by major oil companies and conservation of the state's oil reserves. The tens of thousands of independent oilmen who owned most of the East Texas fields opposed prorationing because of the advantages it gave to the major producers. But they became reconciled to the system when they realized that Thompson and the other railroad commissioners would allow narrow spacing of wells and per-well (rather than production potential) prorationing allocations. These policies favored smaller producers.
In 1938 Thompson might have been elected governor, but for the late entry of flour magnate W. Lee O'Daniel in the Democratic primary. Thompson ran largely on the issues of the day-the state's social security pledges, for example-but was overwhelmed by O'Daniel's flashier campaign. Thompson tried again in 1940, with the proposals of aid to labor, a public utility commission, and a nickel-a-barrel oil tax to pay for the state's social security pensions. He noted that Texas oil would not last forever and that it was taxed for less than that of some other states, but despite these appeals Thompson finished second again. His career and the accomplishments of the Railroad Commission during his tenure on it are both controversial and complex subjects. Certainly the commission authorized practices not yet widely perceived as wasteful, such as narrow spacing of wells, allocations on a per-well basis, and the flaring of casinghead gas. Nor does it seem, in the view of some, that the commission was as responsive to the needs of consumers or as stringent in curbing pollution as it should have been. But Thompson did try to reconcile the conflicting demands of the major oil companies with those of the smaller, independent producers. Many of the policies he advocated were attempts to keep the state's oil-based wealth within the state whenever possible. Thompson was a dominant figure in the oil industry because of his knowledge of it, his intelligence, and his charisma. He resigned from the commission in January 1965 and died on June 28, 1966.