The oil production capital of America toasted the inauguration of President Reagan and his pledge to get government off their backs at the Holiday Inn just outside of town, and the centerpiece on the food table said it all.

Surrounded by nachos and deviled eggs, vegetables and barbecued smoky links was a cutout of the Capitol dome, and on it was one word: "Ours."

Out here, where the 55 mph speed limit is considered cruel and unusual punishment and the oil profit tax is a symbol of federal oppression, more than 300 local citizens -- Republican and Democrats alike -- paid $5 apiece to hear the melodious tones of the Glenn Miller Orchestra and the Tonight Show's Ed McMahon piped in here by closed circuit television. It was one of the roughly 100 satellite inaugural balls across America.

Technical failures forced the sponsors to give up on the promised huge screen in favor of one barely five feet square, but people took it as a good omen. "This is the first sign that Ronald Reagan's going to shrink the government," one of the guests quipped.

The crowd clapped when Reagan and his wife, Nancy, showed up at the Washington Hilton, and they applauded louder when he characterized the freed American hostages as "prisoners of war."

"I think the Iranians timed the release of the hostages to diminish Reagan's inauguration," said Winfree Brown, a Republican county commissioner. "But I think it really enhances the day, doesn't it?"

Even without the release of the hostages, this was a special day for Midland, long a Republican oasis in a Democratic state, and it may have sent more people per capita to the celebrations from Washington than any other city in America. Vice President and Barbara Bush made Midland their home while Bush built his fortune in the oil business; his son and daughter-in-law still live here. When the Bushes appeared in the ballroom of the Holiday Inn via television, a few people even stood up and cheered.

Earlier today, at an inaugural party in the home of Margaret Walker, women who had helped build up the Republican Party here talked about the Bush family as if they were still next-door neighbors.

Whenever one of the Bush children showed up on television, the women squealed in recognition. "There are our babies," one said.

Bettye Calvert was showing off the picture of her and George Bush taken in May 1964 when he was running for the Senate. And one of the women told Olive Waller, "You should have saved your letters from him."

"No," she replied with a twinkle. "Mine were naughty."

But even after all these years, some people in Midland still think of Bush as an outsider whose real loyalties lie with Eastern Republicans and the Trilateral Commission, and it is the potential of Reagan's conservative presidency that makes this oil boom town throb with excitement.

"People say Midland is a Republican town," said Bill Shaner, the beaming GOP county chairman. "It isn't. It's a conservative town. We feel in Reagan we now have a spokesman. It's a very big deal."

At Margaret Walker's today, there were cheers and hallelujahs and even a tear or two when Reagan took the oath of office and told Americans that government was not a solution to their problems but part of the problem. And when he reminded citizens that the states created the federal government, Olive Waller cheered and said, "You can tell 'em, Ron."

"We still have the pioneer spirit here," she said. "The hell with the government running everything."