What If Oklahoma Diversified Beyond Oil and Gas Earlier?

The Actual History

Oklahoma's economic identity has been inextricably linked to the oil and gas industry since the early 20th century. The state's first commercial oil well, the Nellie Johnstone #1, was completed in 1897 near Bartlesville, marking the beginning of Oklahoma's petroleum era. By 1907, when Oklahoma achieved statehood, oil production was already booming. The discoveries of the Glenn Pool (1905), Cushing Field (1912), and Burbank Field (1920) cemented Oklahoma's reputation as an oil powerhouse.

The 1920s represented the first golden age of Oklahoma oil, with the state producing over 300 million barrels annually by 1927. Cities like Tulsa—dubbed the "Oil Capital of the World"—Oklahoma City, and numerous smaller communities thrived on petroleum wealth. Oil barons like Frank Phillips, E.W. Marland, and J. Paul Getty built empires headquartered in the state, while companies including Phillips Petroleum (now Phillips 66), Champlin, and Skelly Oil drove development.

When the 1970s oil crisis hit, Oklahoma experienced an unprecedented boom. As oil prices quadrupled following the 1973 OPEC embargo and rose again after the 1979 Iranian Revolution, the state's economy soared. The period from 1973 to 1982 saw explosive growth in employment, state revenues, and population. Oklahoma's unemployment rate remained well below the national average, and per capita income rose dramatically. Commercial construction boomed in Oklahoma City and Tulsa, with iconic structures like Tulsa's Williams Center and Oklahoma City's Leadership Square rising during this period.

The good times ended abruptly in 1982-83 when oil prices collapsed. By 1986, oil had plummeted to $10 per barrel, triggering a severe economic depression. Oklahoma lost over 100,000 jobs, state tax collections plummeted, and the banking sector imploded with the failure of Penn Square Bank triggering ripple effects throughout the financial system. This bust demonstrated the dangers of the state's economic dependence on a single volatile industry, yet significant diversification remained elusive.

The cycle repeated in subsequent decades. During the 1990s, Oklahoma took modest steps toward diversification, with some growth in aviation, telecommunications, and services. In 1993, the Oklahoma Center for the Advancement of Science and Technology (OCAST) was established to foster technology-based economic development. However, when oil prices rose again in the early 2000s, reaching record highs by 2008, the energy sector again dominated economic growth.

Following the 2014-16 oil price collapse and the subsequent volatility through the 2020s, Oklahoma's economy continued to experience boom-and-bust cycles. Despite incremental diversification into aerospace, biotechnology, and services, as of 2025, the petroleum industry remains the state's economic centerpiece. Oklahoma ranks consistently low in education outcomes, healthcare metrics, and infrastructure quality—legacies of the state's prioritization of low taxes and minimal government intervention, approaches that were politically feasible during oil booms but proved unsustainable during downturns. The state's failure to meaningfully diversify earlier has left it perpetually vulnerable to global energy price fluctuations and slower to develop robust alternatives to its traditional economic engine.

The Point of Divergence

What if Oklahoma had implemented serious economic diversification strategies during the 1970s oil boom? In this alternate timeline, we explore a scenario where Oklahoma's leadership made a conscious decision to invest oil and gas windfall revenues into building a more resilient and diverse economy decades before the economic imperatives of the 21st century forced such considerations.

The point of divergence centers on Oklahoma's response to the 1973 OPEC oil embargo and the subsequent price shocks. As petroleum revenues flooded state coffers, several potential divergence mechanisms emerge:

One plausible mechanism involves Governor David Hall (1971-1975) embracing expert warnings about energy sector volatility rather than facing the corruption charges that derailed his actual administration. In this alternate timeline, instead of the bribery and extortion scandal that led to his conviction, Hall might have channeled his ambitious personality toward creating a legacy of economic transformation. Influenced by economic advisors who recognized the finite nature of the oil boom, Hall could have established Oklahoma's first sovereign wealth fund, modeled loosely on strategies already being discussed in oil-rich nations like Norway and certain Middle Eastern states.

Alternatively, the divergence might have occurred under Hall's successor, Governor David Boren (1975-1979). A young, reform-minded Democrat with national ambitions, Boren could have positioned Oklahoma as a pioneer in state-level economic planning. Instead of focusing primarily on government ethics reforms (his main legacy in our timeline), Boren might have created a comprehensive economic diversification initiative, establishing research centers at Oklahoma's universities focused on emerging technologies and industries beyond petroleum.

A third possibility involves a grassroots movement among influential Oklahoma business leaders, particularly those who remembered previous boom-and-bust cycles. In this scenario, consortiums led by figures like Dean McGee (Kerr-McGee) and William Swisher (CMI Corporation) could have collaborated with state government to create public-private partnerships focused on economic diversification, using their business acumen to guide investments in manufacturing, technology, and human capital development.

Whatever the specific catalyst, in this alternate timeline, Oklahoma established the "Oklahoma Future Fund" in 1975—a sovereign wealth fund seeded with 15% of all oil and gas tax revenues—and created a comprehensive economic diversification plan that would fundamentally alter the state's development trajectory over the following decades.

Immediate Aftermath

The Oklahoma Future Fund

The immediate impact of Oklahoma's diversification initiative centered on the creation and implementation of the Oklahoma Future Fund (OFF). Established by legislation in 1975, the fund represented a radical departure from Oklahoma's traditionally conservative fiscal policies:

Initial Capitalization: The fund was seeded with $250 million (equivalent to nearly $1.3 billion in 2025 dollars) from oil and gas revenue surpluses, with a mandated contribution of 15% of all future oil and gas tax revenues.
Investment Strategy: Unlike the state's general fund, the OFF operated under a sophisticated investment mandate, allowing it to take equity positions in private companies, fund research initiatives, and make long-term investments in infrastructure and education. A professional investment board comprised of both financial experts and public representatives managed the fund, independent from direct political control.
Constitutional Protection: Following intense political debate, Oklahomans approved a constitutional amendment in 1976 protecting the fund from legislative raids during budget shortfalls, requiring a three-quarters majority in both houses plus a public referendum to access the principal for non-diversification purposes.

The fund grew rapidly during the late 1970s oil boom, reaching $1.5 billion by 1980 (approximately $5.1 billion in 2025 dollars), providing substantial financial resources for the state's diversification initiatives.

Higher Education Transformation

Recognizing that diversification required human capital development, Oklahoma leaders immediately targeted the higher education system for substantial reforms:

Research Triangle Initiative: Inspired partly by North Carolina's Research Triangle, Oklahoma established dedicated research centers at its three major state universities. The University of Oklahoma focused on biotechnology and medicine, Oklahoma State University specialized in agricultural technology and aerospace engineering, and the newly established Tulsa University Research Park concentrated on telecommunications and computer technologies.
Industry Partnerships: Each research center formed strategic alliances with existing Oklahoma companies. For example, OSU's aerospace program partnered with Rockwell International's Tulsa facility (which manufactured bombers and later commercial aircraft components), while OU's biomedical initiative collaborated with Oklahoma City's emerging medical complex.
Technical Education Expansion: The state dramatically expanded its vocational-technical school system, establishing specialized programs in computer programming, advanced manufacturing, and healthcare technology—fields chosen specifically for their growth potential beyond the energy sector.

Educational leaders embraced these initiatives enthusiastically. Dr. E.T. Dunlap, Chancellor of the Oklahoma State System of Higher Education, redirected institutional priorities toward programs aligned with the diversification strategy, remarking in 1977: "Oklahoma's universities must transform from regional education providers to engines of innovation and economic development."

Initial Business Development Programs

The state implemented several programs to immediately catalyze non-energy business development:

Oklahoma Venture Capital Fund: The OFF allocated $100 million to establish the state's first venture capital fund in 1977, providing crucial early-stage financing to entrepreneurs in targeted industries. This fund took equity positions in promising startups, with returns flowing back to the OFF.
Rural Enterprise Zones: Recognizing that previous economic booms had primarily benefited urban areas, Oklahoma created specialized economic development zones in rural communities, offering tax incentives and infrastructure development for non-energy businesses that established operations in these areas.
Technology Transfer Office: A centralized office was established to commercialize research from state universities, helping transform academic innovations into viable businesses. This office provided patent assistance, business development support, and connections to the venture capital fund.

Political Reactions

The diversification initiative generated significant political controversy. Many conservative legislators initially opposed what they viewed as government overreach, while oil and gas interests expressed concern about diminished political influence.

State Senator John Massey of Durant captured the opposition view: "This misguided program diverts money from taxpayers' pockets into speculative government investments. The free market, not state bureaucrats, should determine Oklahoma's economic future."

Meanwhile, supporters argued that the program represented essential foresight. In his 1978 State of the State address, Governor Boren defended the initiative: "Our present prosperity is a blessing that carries great responsibility. We can spend these windfall revenues on current desires, or we can invest them to secure freedom from the boom-and-bust cycles that have defined our state's history."

The initial results helped quiet some criticism. By 1979, the diversification programs had helped launch or expand over 200 non-energy businesses, creating approximately 15,000 new jobs. More importantly, these businesses were concentrated in sectors with growth potential independent of oil prices, laying the groundwork for the economic resilience that would become crucial in the coming decade.

Long-term Impact

Weathering the 1980s Oil Bust

When oil prices collapsed in the early 1980s, alternate-timeline Oklahoma experienced significant economic stress but avoided the catastrophic depression that afflicted our timeline's state:

Economic Cushion: By 1982, the Oklahoma Future Fund had grown to approximately $3.2 billion. Rather than depleting this principal, the state used investment returns to fund targeted economic stabilization programs. These included infrastructure development during the downturn (employing laid-off oil workers) and bridge loans to viable businesses facing temporary liquidity problems.
Diversified Employment Base: While the state still lost tens of thousands of energy-sector jobs, the impact was partially offset by the approximately 50,000 jobs created in newer industries since 1975. The aerospace sector proved particularly important, as military spending increased during the Reagan administration. The manufacturing facilities established around Tinker Air Force Base became major employers for displaced oil workers.
Financial System Resilience: The banking crisis that devastated Oklahoma's financial system in our timeline was significantly mitigated. The OFF partnered with federal authorities to recapitalize struggling local banks through preferred equity investments rather than allowing their collapse. Penn Square Bank still failed due to its extreme oil loan exposure, but the contagion was contained through swift intervention.
Educational Continuity: Unlike our timeline, where education funding plummeted during the 1980s, the constitutional protections around education investments preserved Oklahoma's educational momentum. The research initiatives launched in the 1970s continued to develop, albeit with more modest funding growth.

Governor George Nigh, who led the state through this period, later noted: "The diversification initiatives didn't make us immune to the oil bust, but they gave us tools to fight back that simply didn't exist before. Instead of just enduring the bust, we were able to actively respond to it."

The Technology Boom (1990s-2000s)

As the global technology sector surged in the 1990s, Oklahoma's earlier investments positioned the state to participate in ways that would have been impossible in our timeline:

Telecommunications Hub

Southwestern Bell Expansion: The telecommunications infrastructure and specialized workforce developed through the 1980s made Oklahoma attractive when Southwestern Bell (later AT&T) was seeking locations for its operational centers. In 1992, the company established a major technical operations center in Oklahoma City, employing over 2,500 people in high-wage technical positions.
Tulsa's Fiber Valley: The Tulsa metropolitan area emerged as a regional telecommunications hub, dubbed "Fiber Valley," with multiple data centers and telecommunications switching facilities. Companies including Williams Communications (which leveraged its pipeline right-of-ways for fiber optic networks) and WorldCom established significant operations in the region.

Aerospace and Aviation Growth

Expanded Manufacturing Base: Building on the initial aerospace investments of the 1970s, Oklahoma's aviation manufacturing sector expanded dramatically. In addition to military contracts at Tinker AFB, the state attracted commercial aviation manufacturing, particularly after Boeing acquired Rockwell's aerospace divisions. By 2000, the aerospace industry employed over 85,000 Oklahomans (compared to approximately 40,000 in our timeline).
Unmanned Aerial Vehicle Development: OSU's aerospace program, having maintained research momentum through the 1980s, became an early leader in unmanned aerial vehicle (UAV) technology. This expertise attracted defense contractors and spawned several successful startups focused on both military and civilian UAV applications.

Biomedical and Healthcare Innovation

Research to Commercialization Pipeline: The University of Oklahoma Health Sciences Center, strengthened by consistent investment, developed into a nationally significant biomedical research institution. The Oklahoma Medical Research Foundation, working in close partnership with the university, produced several breakthrough treatments that were commercialized through Oklahoma-based pharmaceutical startups.
Healthcare Technology Cluster: Norman and Oklahoma City developed a specialized cluster of healthcare information technology companies, leveraging both medical research and computer science expertise. By 2005, this sector employed approximately 12,000 people and had produced two Fortune 1000 companies specializing in electronic medical records and healthcare administration systems.

Educational and Demographic Transformation

Oklahoma's educational outcomes and demographic trends diverged significantly from our timeline over the decades following diversification:

Educational Attainment: By 2010, 31% of Oklahoma adults held bachelor's degrees or higher (compared to 22.7% in our timeline), approaching the national average. The state's K-12 education system, benefiting from more stable funding and higher expectations driven by the knowledge economy, showed significantly improved outcomes, with standardized test scores rising from well below national averages to slightly above by 2015.
Brain Drain Reversal: The "brain drain" that characterized Oklahoma for much of the 20th century reversed. Between 1990 and 2020, the state experienced net in-migration of college-educated professionals, primarily attracted by the growing technology and aerospace sectors. Tulsa and Oklahoma City consistently ranked among the most affordable cities for young professionals in national surveys.
Urban Renaissance: Oklahoma City and Tulsa underwent urban revitalizations much earlier than in our timeline. The MAPS (Metropolitan Area Projects) initiative that transformed Oklahoma City began in 1989 rather than 1993, and included more significant investments in research parks and technology infrastructure alongside quality-of-life improvements.

Political Evolution

The economic diversification fundamentally altered Oklahoma's political landscape over time:

Pragmatic Governance: While still generally conservative, Oklahoma politics evolved toward a more pragmatic, business-oriented approach rather than the ideological polarization seen in our timeline. The visible success of the diversification initiatives legitimized certain forms of government economic intervention when structured as public-private partnerships.
Educational Consensus: Support for education funding became a bipartisan consensus position, with Republican and Democratic administrations alike protecting and expanding investments in research and development, particularly in areas aligned with economic growth sectors.
Energy Sector Transformation: Rather than resisting energy transitions, Oklahoma's oil and gas companies began diversifying their own operations earlier. By the 2010s, several major Oklahoma energy companies had substantial renewable energy divisions. The state became a leader in wind energy production while maintaining its traditional oil and gas base, creating a more balanced approach to energy development.

Oklahoma in 2025

By 2025, alternate-timeline Oklahoma presents a substantially different economic and social landscape than our timeline's state:

Economic Metrics: The state's per capita income stands approximately 18% higher than in our timeline, with poverty rates 7 percentage points lower. Income inequality, while still present, is significantly less pronounced, with a larger middle class employed in knowledge-economy sectors.
Balanced Energy Economy: While oil and gas remain important, they represent approximately 15% of the state's economy rather than the 25-30% in our timeline. Renewable energy, aerospace, information technology, and biomedical sectors collectively employ more Oklahomans than the petroleum industry.
Educational Standing: Oklahoma ranks in the top 20 states for educational outcomes rather than the bottom 10, with particularly strong performance in STEM fields. The state's higher education system includes three nationally ranked research universities rather than one.
Innovation Metrics: The state produces approximately 3.5 times more patents per capita than in our timeline, with Tulsa and Oklahoma City recognized as emerging innovation hubs in specific technological niches including aerospace systems, energy grid management, and agricultural technology.

Perhaps most importantly, Oklahoma has developed economic resilience. When the COVID-19 pandemic and subsequent oil price crash hit in 2020, the state experienced significant challenges but maintained essential services and recovered more quickly than neighboring states that remained more dependent on extractive industries.

Expert Opinions

Dr. Sarah Jenkins, Professor of Economic Development at the University of Oklahoma, offers this perspective: "The Oklahoma diversification initiative represents one of the most successful state-level economic interventions in American history. The genius was in its timing—using the windfall from an unprecedented boom to build foundations for long-term growth rather than expanding recurring expenditures. The constitutional protection of the Future Fund proved particularly crucial, as it prevented the short-term political thinking that typically diverts such resources during downturns. Had Oklahoma not diversified until the 2010s, as we've seen in our actual timeline, the state would have missed multiple technology and industry growth cycles that were essential to building its alternative economic sectors."

Robert Blackburn, Executive Director of the Oklahoma Historical Society, provides a cultural and historical context: "Oklahoma's historical narrative has always featured a tension between populist distrust of distant economic powers and entrepreneurial ambition. The diversification initiative succeeded because it channeled both impulses—protecting Oklahoma from the boom-and-bust cycles imposed by global market forces while creating space for homegrown innovation. The state's early petroleum barons like E.W. Marland actually pioneered diversification at the company level, but the 1970s initiative marked the first time this approach was systematically applied at the state level. The result has been a more empowered Oklahoma with greater control over its economic destiny."

Dr. Michael Running Wolf, Professor of Native American Studies and Technology Policy at Oklahoma State University, highlights an often overlooked dimension: "The alternate timeline's diversification initiative created unprecedented opportunities for Oklahoma's tribal nations. As sovereign entities with significant land holdings and growing financial resources after federal recognition strengthened in the 1970s, tribes were well-positioned to participate in new economic sectors. The Cherokee Nation's technology services division, established in 1995, became one of the largest IT employers in northeastern Oklahoma, while the Chickasaw Nation diversified well beyond gaming into healthcare technology and aerospace manufacturing. This economic convergence facilitated political cooperation that would have seemed impossible in the 1970s, with tribal, state, and private sector entities forming developmental partnerships rather than remaining locked in jurisdictional conflicts."