Galbraith Opposes Rental of Oil Land

John Kenneth Galbraith, Paul M. Warburg Professor of Economics, has urged in a report to Secretary of the Interior Stewart Udall that oil shale lands in Colorado, Wyoming, and Utah, not be leased to private companies until further knowledge of their value is available.

He said in an appendix to the report of the six-man Oil Shale Advisory Board that leasing the lands before the cost of extracting the oil is known would amount to "offering a subsidy of unknown value for a development of unknown cost promising a return of unknown amount."

Stimulate Research

The Board was set up on June 30, 1964, by Udall to analyze the problems associated with development of oil shale deposits on Federally owned land. Since no economic method is at present known for extracting the oil from the land, the major problem facing the committee was how to stimulate research in this direction.

Since the costs of development and production are still unknown and since the recovery value of oil in the land can only be estimated, Galbraith asserted that leasing the land to private companies now would be "dispersing public property while wearing multiple blindfolds."

Find Production Method

He suggested, instead, that the Department of the Interior should contract with interested firms specifically to research methods of mining and processing. The process could then be made available on general license and, with the costs known, the government could ascertain the value of the land for the purpose of leasing.

The land is estimated to contain 2000 billion barrels of oil equivalent, or about 25 times the amount produced in the entire history of this country. Galbraith stressed that the government must be particularly cautious in the disposition of such a valuable publicly owned resource.

He warned that "the large quantities of oil in small acreages belonging in part to a Naval oil reserve would seem certain to stimulate recollections of Teapot Dome and Elk Hills."

Shale oil lands are at present owned by several companies, Galbraith noted, and thus "are being deterred not by government ownership of other land, but because of the costs of development."

Allenation, Not Development

He claimed that "much of the current interest in leasing is related not to a desire for development but to a desire to control land," and that the real interest of those opposing government appropriations for research on production methods is "the alienation of the land, not the development of the resource."