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The Odd Politics of Drilling on Public Lands

by Michael Levi
June 20, 2012

I’m in Ohio this week talking to people about the Utica shale boom. I’ll have more to say later, but right now, I want to share an interesting bit of one conversation I had yesterday.

I was talking to a dairy farmer who is adamant that his community should not be allowed to stop him from leasing his land to gas drillers. He treated me to an impassioned defense of private property rights, and warned against infringing on peoples’ freedom to contract.

But then he pivoted from what had seemed like a pure pro-drilling stance. Ohio has started to lease public lands to drillers, and that’s made him furious. Part of this was a simple desire for conservation. But the bigger concern he had was that more drilling on public lands would drive down the price of natural gas. That, of course, would hurt the value of his mineral rights.

It’s an interesting angle that I hadn’t thought about before. When it comes to oil, the United States remains a big importer, and thus benefits as a whole when more U.S. oil production lowers world prices. That’s true even if many U.S. producers lose out.

But that isn’t necessarily true for gas, where the United States is on the fence between being self-sufficient and being a small exporter. Producing more from public lands will lower prices and therefore transfer wealth from private producers to private consumers. I’m not quite sure how it would shake out on net — I suspect it depends on some finer details.

Regardless, though, this could mix up the politics of natural gas production in this country. Broad participation in natural gas production by private property owners could create a peculiar new constituency that’s pro-gas but against drilling on public lands. It’s something worth watching out for.

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