When it comes to producing a sustainable and plentiful supply of energy, the U.S. has a huge and utterly underappreciated advantage over other nations. Here, individuals and companies are allowed to own mineral rights.
In other countries people can own land, but the government owns and strictly controls any minerals and natural resources, such as oil, gas, coal, copper, gold, silver and so forth, beneath the surface of someone’s property. If you discover oil in your backyard, you’re out of luck—it belongs to the government. This has profound implications that are usually overlooked.
Private ownership of mineral rights in the U.S. means that people and private companies have a strong incentive to search for minerals. They can profit from the discovery, development and extraction of these natural resources. This puts a premium on exploration.
The U.S. has major-league oil- and-gas companies, but it also has an enormous and vibrant wildcat industry. These independents are often more active and nimbler than their giant counterparts. In certain parts of the country, where the geology may be favorable, private-property owners are open to exploring what may be below the surface of their land—or to selling the leasing rights to others. In that case, if, say, oil is found, the owner would be entitled to royalties. These individual rights lead to far more exploration. The geology of the southwestern U.S. is no different than that found across the border in Mexico, yet oil-and-gas exploration in that part of the U.S. is far greater than what is carried out in Mexico.
Why? Because the oil industry in Mexico is owned by the government. There is no Mexican equivalent of American wildcatters.
America’s unique approach to mineral rights has also kindled an innovative entrepreneurial environment. Whereas governments elsewhere have strict controls on how minerals are extracted and developed, U.S. companies can try new ways of doing things.
This freedom to experiment is how drillers made the breathtaking break- throughs in lateral oil drilling and hydraulic fracturing, known as fracking, that skyrocketed U.S. output. Natural gas, a clean fuel once thought to be running out in the U.S., became abundant. This led to our energy in- dependence, which is now in jeopardy because of the Biden Administration’s fossil-fuel antipathy.
Despite the U.S.’ experience, Mexico’s government-controlled, top-down approach predominates in the rest of the world. For instance, there’s a huge amount of natural gas waiting to be found and developed in Britain, Europe and elsewhere. But an individual’s not having American-style ownership and control of the minerals beneath the surface of his land is a costly hindrance.
