Memo To: NYTimes Sunday Business
From: Jude Wanniski
Re: Oil Supplies at Risk
The lead story in your Sunday “Money&Business” section by Neela Banerjee, “Fears, Again, of Oil Supplies at Risk,” suggests several scenarios where terrorism or war in the Middle East could drive the price of oil sky-high. This is because two-thirds of the world’s known reserves are there, 649 billion barrels, while the U.S. has only 3% of known reserves, 22 billion bbl.
When I was writing the energy editorials for The WSJournal in the 1970s, I discovered that of the 3.3 million oil and gas wells drilled since 1859, when oil was first discovered in Pennsylvania, 2.5 million were drilled in the “oil patch” of the United States. The main reason for this concentration, I surmised, was not that God had put the oil there, as is the case in the Middle East, but that our country is the only one in the world where private citizens own the mineral rights of their surface properties. Everywhere else, the government claims ownership.
If we are to reduce reliance upon Middle East oil, we need only encourage the rest of the world to follow our example and give their citizens the mineral rights to their property. Exploration would occur in places governments or major oil companies would never consider. As an example, Madagascar is the size of Texas and has the same geological formations. There have been several hundred thousand oil and gas wells drilled in Texas, a few hundred in Madagascar.
In fact, the world has not yet been seriously explored for liquid petroleum and natural gas. If you emptied Lake Tahoe, Nevada, of its water and filled it with all the oil ever produced on earth, it would not fill half the crater. If we could persuade Mexico to start this ball rolling by giving its people rights to the minerals under the ground they own, it would not be long before we would not need to import any oil from the Middle East.
The Organization of Petroleum Exporting Companies (OPEC) could not exist if there were tens of thousands of independent wildcatters around the world instead of a few governments controlling the spigots. If the idea spread through Asia and Africa, it would be several centuries before we would have to worry about Middle East disruptions, embargoes or energy shortages generally.