August 14, 2000
The Bush Family "Oiligarchy"
Part One: The Early Years
Politics and Oil Meet
Back in Connecticut, Prescott Bush had won a special election to gain a U.S. Senate seat on his second try in 1952. He had been in office two months when his son launched Zapata. Early on, Prescott Bush established himself as a moderate, somewhere between an Eisenhower and a Rockefeller Republican on issues such as labor and immigration.
Prescott Bush’s positions on issues related to the oil industry were more complicated. In 1953, Sen. Lister Hill of Alabama promoted legislation that would federalize offshore resources, including oil, in order to raise revenue for the government. The money would go to increase funding for education.
Sen. Bush became a point man for denouncing Hill’s legislation. Bush wrote that the issue of funding for schools “should be an entirely separate question from that of submerged lands and warrants careful study because of the danger of federal control of education.” Sen. Bush’s leadership was central in defeating Hill’s legislation. [See Parmet’s George Bush.]
Whatever the merits of federalizing offshore deposits of natural resources and of federal aid to education, a backdrop for the Bush family was the coincidence that George H.W. Bush was moving into offshore oil drilling by establishing the Zapata Offshore Oil Co. The defeat of Hill’s legislation removed a potential obstacle to those plans.
While Prescott Bush was establishing himself in the Senate, his son was earning the grudging respect of West Texas oilmen. Oil tycoon Henry Hunt III wrote some years later that George H.W. Bush “wasn’t yet a full-fledged self-made millionaire, but for a 35-year-old Yalie who had learned the oil business from scratch, he was doing very well.”
Bush’s early Zapata Petroleum partners included Overbey and two brothers, J. Hugh Liedtke and William C. Liedtke, who ran a law firm across the street from Bush-Overbey’s office in downtown Midland. The Liedtkes, whose father was the chief counsel for Gulf Oil, were widely respected in the oil business.
Hugh Liedtke seemed to have a special knack and became the oil brains behind Zapata Petroleum as it quickly grew into a successful business. Bush’s role in Zapata was to use his family connections to provide the needed capital investments while the Liedtkes brought the know-how.
By 1955, Zapata was involved in two distinct oil businesses, offshore drilling and land drilling. Business seemed to be running smoothly. Soon, however, the Liedtkes began to grow impatient with the control Uncle Walker sought to establish over Zapata.
Negotiations began between Bush and the Liedtkes to try to find a more harmonious balance. A series of stock swaps orchestrated by Bush resulted in divided control over Zapata Offshore and Zapata Petroleum. Bush and Uncle Walker won control over the offshore business and the Liedtkes gained control of the original Zapata Petroleum. [See Parmet’s George Bush.]