World of Modern Petroleum and the Oil Rent

Abstract

In this chapter, the objective is to unravel the enigma of rent and to present a well-defined theory of rent unique to the global oil industry. The truism of the above citation from Smith’s magnum opus shall be a piece of the puzzle that will hopefully find a specific resolution for the oil industry—albeit without the entrapment of mainstream economics monopoly—in this chapter. This theory must patently originate from the valorization of the landed (surface and/or subsurface) ownership—which in our case extends to the ownership of oil deposits—toward the exploration, development, and the production of oil. Valorization of the landed property is an act of capital as a modern social relation (not an inanimate thing) through the medium of nature. This mediation is socially involuntary (i.e., objective) and has no bearing on the wishes of the individual owner of the land or the deposits underneath. The oil deposits once valorized step into a mutuality of synthetic relation with capital, and just like space and time directing space-time in modern astrophysics, do not have an independent existence from one another. In other words, there are no separate logics, one for property in nature (geography or territory) and another for capital where it comes to the notion of rent.¹

The landlord demands a rent even for unimproved land, and the supposed interest or profit upon the expense of improvement is generally an addition to this original rent.

—Adam Smith The Wealth of Nations (1977 [1776]: 248)