The Huntington Beach Oil Field is part of rich pools of oil found along the West Coast of the United States in the early 1920s stretching from Huntington Beach, California to Santa Barbara, California.
On May 24, 1920, the first Huntington Beach well was brought in as a producing well. By October 1921, the field had 59 producing wells.
The conflict of coastal oil drilling with beachfront recreation and tourism has been a central theme in Southern California politics.
This is the result of a lack of undeclared property rights over oil reserves under multiple lots. Since oil could only be claimed by pulling it out of the ground, and since one lot drilling changed the "flow" of the reserve so that it became difficult for other lots to drill, property owners had a massive incentive to overcapitalize: a race to get the oil before their neighbors did. In many places, It led to greatly reduced yields than could have been possible.
A solution to this: unitization contracts, which form a company between all stakeholders and aims to optimally drill the oil field, as if it were run by only one owner.
These contacts were particularly easy to form in Wyoming, which saw much lower capitalization and much more sustainable yields. In Texas (and presumably California at the time of this photo), laws prevented these contracts from forming without very particular circumstances. This level of drilling density became very common.
savvyfuck on December 4th, 2017 at 13:05 UTC »
The Huntington Beach Oil Field is part of rich pools of oil found along the West Coast of the United States in the early 1920s stretching from Huntington Beach, California to Santa Barbara, California.
On May 24, 1920, the first Huntington Beach well was brought in as a producing well. By October 1921, the field had 59 producing wells.
The conflict of coastal oil drilling with beachfront recreation and tourism has been a central theme in Southern California politics.
Empanser on December 4th, 2017 at 14:17 UTC »
Hey, Env/Resource Econ!
This is the result of a lack of undeclared property rights over oil reserves under multiple lots. Since oil could only be claimed by pulling it out of the ground, and since one lot drilling changed the "flow" of the reserve so that it became difficult for other lots to drill, property owners had a massive incentive to overcapitalize: a race to get the oil before their neighbors did. In many places, It led to greatly reduced yields than could have been possible.
A solution to this: unitization contracts, which form a company between all stakeholders and aims to optimally drill the oil field, as if it were run by only one owner.
These contacts were particularly easy to form in Wyoming, which saw much lower capitalization and much more sustainable yields. In Texas (and presumably California at the time of this photo), laws prevented these contracts from forming without very particular circumstances. This level of drilling density became very common.
vicaphit on December 4th, 2017 at 16:01 UTC »
They're all drinking each other's milkshake.