Skelly was sited between the oil boom camps of Roxana, which was north of Skelly, and Noelette, which was east. The first businesses were company-owned supply stores. Residents had to gather wood for fuel and rely on trucked-in water supplies. The Panhandle and Santa Fe Railway built a branch line north in 1927, from White Deer to the oilfields and established its depot at a site just north of Skelly. all three camps moved their businesses to the new site and formed the Skellytown Townsite Company. Four months later, Skellytown had two oil refineries, a carbon black manufacturing plant and about 100 oil wells operating in its vicinity. Also in 1927, a new post office opened, the Roxana-Skellytown News began publishing every week, Panhandle Power and Light began to provide utilities, and a four-room emergency hospital opened.
As of the census of 2000, there were 610 people, 237 households, and 182 families residing in the town. The population density was 1,416.5 people per square mile. There were 283 housing units at an average density of 657.2 per square mile. The racial makeup of the town was 93.93% White, 0.33% African American, 2.95% Native American, 0.16% Asian, 1.80% from other races, and 0.82% from two or more races. Hispanic or Latino of any race were 4.75% of the population. There were 237 households out of which 35.9% had children under the age of 18 living with them, 64.1% were married couples living together, 9.3% had a female householder with no husband present, and 23.2% were non-families. 21.1% of all households were made up of individuals and 10.1% had someone living alone who was 65 years of age or older. The average household size was 2.57 and the average family size was 2.99. In the town, the population was spread out with 26.6% under the age of 18, 7.9% from 18 to 24, 22.5% from 25 to 44, 25.7% from 45 to 64, and 17.4% who were 65 years of age or older. The median age was 42 years. For every 100 females, there were 94.3 males. For every 100 females age 18 and over, there were 91.5 males. The median income for a household in the town was $31,771, and the median income for a family was $37,667. Males had a median income of $31,250 versus $18,750 for females. The per capita income for the town was $15,087. About 15.3% of families and 14.5% of the population were below the poverty line, including 18.1% of those under age 18 and 8.5% of those age 65 or over.
