EDWARD S. MASON 183 



expected prices are higher than present prices the current costs of 

 operation are obviously enhanced. 



I have no doubt that competitive pricing might, on occasion (e.g., 

 with ownerships in weak financial hands and with inadequate access 

 to the capital market) lead to excessive current production. But with 

 unit operation of pools the incentives against such a practice are 

 strong. Competitive determination of output would, of course, pro- 

 duce much greater price variation than exists at present. But, if this is 

 a problem, it is not primarily a conservation problem. Unregulated 

 atomistic production is inevitably wasteful but, here again, these 

 wastes are better analyzed as external diseconomies than as a failure 

 of conservation. If we mean by conservation a proper time distribu- 

 tion of the rate of use, percentage depletion, with its heavy subsidy 

 to current output, is the real danger, not competitive pricing under 

 unit operation of oil pools. 



Peering somewhat further into the future, with the whole energy 

 problem of the United States in mind, it is obvious that the price pros- 

 pects depend substantially on our foreign trade policy. If we treat the 

 United States as a closed economy, the upper limit to a rise in price 

 of natural oil would presumably be set by the cost of oil recovery from 

 shale and coal of which we have large reserves. If we impose no bar- 

 riers to imports there is no economic reason to expect a rise in oil 

 prices in the foreseeable future. Finally, if account is taken of the 

 potentialities of atomic and, possibly, of solar energy in the not too 

 distant future the question of oil conservation is placed in somewhat 

 clearer perspective. 



I have argued, using the examples of lead and oil, that it is difficult 

 to make a case, on conservation grounds, against the output and price 

 results, for particular materials, of an unregulated price system. 

 For particular agricultural products, taking account of the possi- 

 bilities both of product substitution and of alternative uses of land, 

 the case would appear to be even weaker. When we turn to natural 

 resources in the broad, however, the case may be different. I say may 

 be for two main reasons. Our water problems, though serious, do not 

 seem to me to be primarily concerned with conservation in the narrow 

 sense of the term. And it is a little difficult at the present juncture, 

 with wheat and cotton running out of our ears, and with technological 



