Mutualists and Randians on Arab Oil

I’ve noted before Rand’s bizarre and unlibertarian view that some peoples are “savages” who basically have no rights, like Native Americans and other nomads (so it was okay for Americans to kill them and conquer them), and Arabs who can be nuked (see my posts Centralist, Pro-War Objectivists on Paul and Rand on Collateral Damage; and Roderick Long’s The Justice and Prudence of War: Toward A Libertarian Analysis). And also the Objectivist view that American oil companies “really” owned the oil because the “savages” have no rights and/or because it was American oil companies’ technology helped discover under Arabian soil (and we know that “ideas” are the supreme rights according to Randians).

I used to practice oil & gas law, and the question of how libertarian principles would be applied to underground oil rights always interested me. I believe Rob Bradley suggested an approach in his Oil, Gas & Government [Bob Murphy’s intro], but one approach adopted in some Americna states is the “rule of capture“; and there are other theories in other states.

My own view is that the owner of the surface does not automatically own the minerals beneath but does have a right to use his surface to explore them; and once he finds some oil or gas or whatever, he is entitled to try to get it. I don’t personally think this gives him ownership over his neighbor’s surface estate to the extent he can prevent them from punching a hole in the same pool of oil (this is the rule of capture). I have always intended to develop this theory a bit further but have not gotten around to it yet. But in any case, it seems to me that the surface owners have a way to acquire rights to the oil beneath their land.

Now, it also seems to me that one can hire agents to do things for you, including homesteading or appropriating unowned resources. Thus, Hoppe, in his Property, Causality, and Liability (p. 92), writes:

We have no trouble … conceiving of an “indirect” act of appropriation. A, B’s boss, orders B to clear a piece of previously unowned land and drill for oil. B finds oil. Thereby A, not B, becomes the owner of the oil (although A is only the indirect cause of the act of appropriation).

So, under such a view, even if the Arabs were too primitive to have the technology needed to explore for oil, as owners of the surface they had the right to make a contract with people who did. Thus, when the Western oil companies came in and found oil under Arab land, they homesteaded certain oil rights for the surface owners, as agents of the surface owners. It doesn’t matter that the Arabs didn’t have the right technology–that’s why they entered into the deal with Exxon etc.

This is why Objectivist assertions that the Western oil companies “really” owned the oil because it was their technology that was used, has always seemed fishy to me.

(N.b.: Another friend, Daniel Roncari, mentioned to me that Rothbard wrote:

The Sabahklatura that runs the Kuwait government is immensely wealthy, to the tune of hundreds of billions of dollars, derived from tax/”royalty” loot extracted from oil producers simply because the Sabah tribe claims “sovereignty” over that valuable chunk of desert real estate. The Sabah tribe has no legitimate claim to the oil revenue; it did nothing to homestead or mix its labor or any other resource with the crude oil.

It is reasonable to assume that the Sabah family stands ready to use a modest portion of that ill-gotten wealth to purchase defenders and advocates in the powerful United States.

I am not sure what exactly is the implicit theory Rothbard is relying on here to assert that “The Sabah tribe has no legitimate claim to the oil revenue; it did nothing to homestead or mix its labor or any other resource with the crude oil”. It could be that they are less legitimate than the people or natural owners of the soil; it could be he is adopting Rand’s view here; I do not know. But it seems to me that if the Western oil companies discover oil by using the surface owned by someone else, with the permission of that owner and subject to contractual conditions, then the Western oil company is not the owner–though who has a better claim on the oil in Arabia itself is another matter.)

But as my little buddy Geoff Plauché remarked to me, wouldn’t the mutualists, with their “occupancy” view of rights, have to side with the Randians here? After all, the surface owners didn’t occupy the oil fields–the oil companies did–it was their rigs and personnel sitting on the ground. In fact, by mutualist standards, the Exxons etc. would own the actual surface rights too, no?