The Laws of Economic Rent and Property: Application to the Oil Industry

Abstract Economic rent in general, and oil rent in particular, is an historically‐specific, social category, reflective of unique property relations, which goes beyond the conventional notion of physical scarcity prevailing in economics literature Neither the Ricardian theory nor the neoclassical general equilibrium theory suitably explain the nature of the capital‐land relation and convey an understanding of the priority of their mutual interaction within the production process Being an effect of specific property relation, the phenomenon of rent merely assumes the status of a special category applicable to the concrete conditions of some industries Hence, political economy lacks a general theory of rent The concept of oil rent is based on the potentially conflicting interaction of ownership of oil reserves, and that of the oil leases, within the global oil industry The oil rent is the result of the transformation of the existing differential productivities of oil‐producing regions within the global oil industry The formation of global oil prices and differential oil rents rest on the global competition which has become a distinguishing feature of this industry since the early 1970s