Claims that oil deposits and other extractive resources are “exhaustible” often conflate physical exhaustion (total depletion of the physical stock of a resource) with economic exhaustion (loss of the expected profitability required to induce resource owners to continue extracting and marketing the resource). Yet that distinction is crucial, because when private-property rights are unencumbered, entrepreneurs usually have several strategies available for maintaining the economic value of their firms while they continue to operate them.

John Brätland is an economist with the U.S. Department of the Interior in Washington, D.C.
Business and EntrepreneurshipEconomic PolicyEconomyEnergy and the EnvironmentFree Market EconomicsNatural ResourcesPublic Choice
Other Independent Review articles by John Brätland
Summer 2020 Efficiency as Undetermined Allocation: On a “Just” Privatization of U.S. Offshore Resources
Summer 2010 Capital Concepts as Insights into the Maintenance and Neglect of Infrastructure
Spring 2004 Externalities, Conflict, and Offshore Lands: Resolution Through the Institutions of Private Property