Oil

If generation n extracts X revenues from crude oil extracted from its territory, does it have an obligation to ensure that n + 1 also receives X revenues? If so, how might such a thing be achieved? Here are some thoughts on this matter.

A first key step would be to utilise a time-tested tool for quantifying the ‘value’ of the oil extracted. So rather than purchasing financial paper assets [that may or may not prove to be sensible purchases over the long-term] with the oil revenue gold bullion could be bought. So, for example, oil revenues received by generation n amount to y ounces of gold. y ounces of gold should then be passed onto n + 1. Before this happens, generation n can utilise y in a beneficial manner.

How might n utilise y before the generational transfer occurs?

1. Distribute one ounce of gold to each owner of freehold property. Such ounces of gold will only have to be transferred back to the bait-ul-maal in the event of a change in the owner of the freehold. Obviously, any expected transfer of freehold would then require one ounce of gold to be acquired (or withdrawn from savings) whenever a change in freehold ownership is anticipated.

2. The gold could be used to set up self-funding infrastructure projects. If the income and net worth of the projects exceeds y then n could perhaps benefit from a windfall through the proceeds of complete or partial privatisation of such projects.

3. Interest free loans in which the expected final repayment will occur before the transfer of y to n + 1.

4. Set up schools, universities, hospitals and businesses. At the appropriate time utilise complete or partial privatisation to ensure that y will be available for the transfer to n +1.