Oil City was founded in 1903 as a flag stop along the Kansas City Southern Railroad. At that time the town was known as Ananias, a name that it had supposedly been given by some Shreveport men who owned a hunting and fishing club on Caddo Lake at what is known as Kool Point. Ananias, along with Surrey and Caddo City, were absorbed into Oil City.
Early on, most settlers were fishermen, trappers, and farmers. Others took part in the timber industry, and another group harvested fresh water pearls in Caddo Lake after they were discovered in mussels in 1909. A dam was built in 1914, which caused the water levels to rise, killing the mussels and the pearl industry.
In 1904, Savage Brothers and Morrical drilled the first oil well. After the discovery of oil in 1905, the flag stop was destined to become a boom town. Three years later a man named Hughes convinced the government to add a post office in Oil City. He is also given credit for changing the name to Oil City.
By 1910, the oil business was on its feet, with Gulf Oil drilling the first off-shore. Land sales went from $0.50 an acre to $500 an acre within a year. Some 25,000 people populated the city and all the land had been leased. The men in the oil field camps generally worked 12-hour shifts each day, seven days a week. They slept in tents at the camps. Usually their families did not accompany them. The community supplied the well workers with meals and housing. Passenger trains, operated by Kansas City Southern Railroad, ran between the oil fields and Shreveport.
Oil City had wooden sidewalks and muddy streets with hitching posts for horses. Even the hotel was a tent for a while. There was a modest store that also was a billiard parlor, a post office, and sometimes an auditorium. The passenger and freight stations, along with the Kansas City Southern Railway telegraph office were housed in freight cars. The town became the first “wild cat town” in the Ark-La-Tex, as tough characters and a shack-covered red light district known as Reno Hill gave the town a rough-and-tumble atmosphere.
In the center of town was a lone tree, which law enforcement officials used to tie up drunks while they sobered up. A restaurant, gambling houses, saloons, and the Stag Hotel stood across the railroad tracks on the east side, and a two-story house in Reno Hill served as a dance hall. The sheriff of Oil City closed Reno Hill in 1917.
Oil City was described as being so wild that the crew on the passenger trains were advised to pull the window shades on the train cars to keep the women and children from seeing the fights and murders that occurred on the streets.
Warehouses, stores, hotels, and a movie theater eventually moved into the town. Fire destroyed 12 buildings in 1917. Fires in the 1920s and in 1938 destroyed the subsequent buildings.