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Types of Lease Payments (excerpt)

by Mason Gaffney

      When we combine this pattern of waste with the pattern of improper timing described earlier, they tend to reinforce each other in a general pattern of overdecentralization. Too much is applied too early to expand exploration allied transportation lines. Too little is applied and too late to more intensive development in and around proven reserves. The overall pattern has much in common with imperialism. All of this can be avoided by hewing faithfully to the concept of businesslike management with maximum DCF. That will be our lodestar.

      5. External impacts

      To allow for the externalities of oil and gas production both positive and negative the State seems evenly divided between those who perceive more pluses than those who perceive more minuses. This is appropriate since there are both kinds. The issue between the polarized parties is sharper, however, than can be resolved by such devices as measuring the value of the sports fishery, for example, and trading off these values for equivalent energy values because some of the very things, seen as positive by some like added payrolls, added spending, increased property values seem negative to others. Change viewed as progress by some is seen as retrogression by others. To measure and then reconcile these attitudes would be far beyond our scope.

      We need not, however, leave the matter completely unresolved.

      A key to reconciliation is in the distribution of gains and losses.

      There are probably more gains than losses from general economic development since the actors reinforce one another, but the gains are not equally distributed. One man's windfa11 is another man's wipeout. Many gains are unearned and received by absentee investors. As the problem is distributive so is the probable solution. Wide distribution of the benefits of oil and gas development will make it much more acceptable. Leasing policy can contribute to this solution, although it is by no means the whol