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The Political Allocation of Mineral Rights: A Re–Evaluation of Teapot Dome

Published online by Cambridge University Press:  03 March 2009

Gary D. Libecap
Gary D. Libecap
Affiliation:
Associate Professor of Economics and Director of the Karl Eller Center, University of Arizona, Tucson, Arizona 85721
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Abstract

This paper re–examines the naval reserve oil leases issued by Interior Secretary Fall in 1922 that led to the Teapot Dome controversy. The analysis shows that the leases were the only efficient oil rights arrangement on federal lands through 1930. They were superior to either the naval oil storage policy practiced prior to 1922 or to the general leasing practices found on other federal land. Nevertheless, they were attacked by conservation groups and small oil firms and cancelled in 1922. To explain the opposition to the leases, this paper examines interagency and interest group rivalries for control of federal land. During the period preceding Teapot Dome, the federal government began withholding title to vast tracts of land, and issues of agency jurisdiction and interest group access had not been resolved. The paper concludes that Teapot Dome had little to do with oil conservation and more to do with settling jurisdictional disputes over federal land. The Teapot Dome controversy led to the establishment of the Federal Oil Conservation Board.

Type
Papers Presented at the Forty-Third Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 44 , Issue 2 , June 1984 , pp. 381 - 391
Copyright
Copyright © The Economic History Association 1984

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References

1 For example, see Bates, J. Leonard, The Origins of Teapot Dome (Urbana, 1963)Google Scholar and Noggle, Burl, Teapot Dome, Oil and Politics in the 1920's (Baton Rouge, 1962).Google Scholar An exception is Nash, Gerald D., United States Oil Policy 1890–1964 (Pittsburgh, 1968).Google Scholar

2 Gates, Paul W., History of Public Land Law Development (Washington, D.C., 1968), p. 580.Google Scholar

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4 Johnson, Ronald N. and Libecap, Gary D., “Efficient Markets and Great Lakes Timber: A Conservation Issue Reexamined,” Explorations in Economic History, 17 (1980), 372–85.CrossRefGoogle Scholar

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21 The problems with consolidation of small tracts are discussed in Libecap, Gary D. and Wiggins, Steven N., “Contractual Responses to the Common Pool: Prorationing of Crude Oil Production,” American Economic Review, 74 (03. 1984), 87–98.Google ScholarHam, Joe, The Economics of the Pacific Coast Petroleum Industry, Pt. 3 (Berkeley, 1947), p. 29.Google Scholar

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24 Federal Oil Conservation Board, Report to the President of the United States (Washington, D.C., 1926);Google ScholarNoggle, Teapot Dome, p. 179.Google Scholar