On January 10, 1901, a drilling crew near Beaumont, Texas, hit something at a depth of 1,139 feet. The Lucas geyser at Spindletop shot oil over a hundred feet into the air and flowed an estimated 100,000 barrels a day. It took nine days to cap it.
Within a year, 285 wells were pumping on the same salt dome. By 1902, the field produced 17.5 million barrels. By February 1904, output had collapsed to 10,000 barrels a day. The resource was not gone. It had been wasted.
The problem was a legal doctrine called the rule of capture. Whoever pumped oil first owned it, even if it drained from underneath a neighbor’s land. The incentive was to drill as fast as possible and pump as hard as possible before someone else got to it. No one had a reason to conserve. Everyone had a reason to race.
One City Block, Forty-Four Wells
The same pattern repeated on a larger scale in 1930, when the East Texas Oil Field was discovered. It was the largest oil reservoir in the United States at the time. And the rule of capture turned it into a free-for-all.
Operators drilled in the yards of homes. One city block in Kilgore had forty-four wells. Everyone pumped at full speed. The glut crashed crude oil from ninety-nine cents a barrel to thirteen cents by July 1931. Gasoline sold for two cents a gallon. Producers responded to the falling price by pumping even harder, which pushed the price lower still.
The resource belonged to everyone above it. The revenue went to whoever grabbed it fastest. And the waste was enormous.
What Texas Figured Out
Texas solved this in the early 1930s. The Texas Railroad Commission issued prorationing orders that limited how much each well could produce. The state did not tax the oil workers’ wages and redistribute the money. It did not wait for the oil to become gasoline, get sold at a station, generate profit, and then try to claw back a share. It charged at the source. Before the oil became a product. Before the money scattered into the economy.
The Connally Hot Oil Act of 1935 gave federal backing to these state rules, banning interstate commerce in oil produced in violation of prorationing orders. The result: prices stabilized, waste dropped, and the resource lasted decades longer than it would have under open capture.
The lesson was clear enough. If a shared resource has value, charge for its use at the point of extraction. Do not wait until the value has moved through ten transactions and try to recover it through income taxes.
Three Resources Still Under the Rule of Capture
That lesson is ninety years old. We have not applied it to the three largest commons in the modern economy.
The electromagnetic spectrum. FCC auctions have raised over $233 billion since 1994. That money went to the U.S. Treasury. The public, which owns the spectrum, received no direct share. The next auction is scheduled for June 2026.
The atmosphere. Carbon pricing instruments in 80 jurisdictions generated over $100 billion in 2024. Governments collected it. Citizens in most countries saw none of it.
Behavioral data. The global advertising industry hit $1.14 trillion in 2025, built on data collected from billions of users. No royalty is charged on the data itself. The people who generated it receive nothing.
These three commons produced roughly $1.4 trillion in measurable economic value last year. The amount returned directly to the people who share ownership of those resources: zero.
This is the modern rule of capture. Whoever grabs the resource first — the telecoms, the polluters, the platforms — keeps the revenue. Everyone else gets nothing, unless a government decides to tax something else and hand out a check.
The Thought Experiment
Imagine if Texas, in 1931, had looked at the East Texas oil chaos and said: we will not charge at the wellhead. Instead, we will let the companies pump for free, wait for the profits to show up as wages and dividends, tax those, and then write checks to citizens.
That is what every major UBI proposal does today with spectrum, carbon, and data.
Andrew Yang’s Freedom Dividend would have been funded by a value-added tax — a levy applied after the data has already been collected, processed, sold, and turned into advertising revenue. The CRFB estimated it would raise between $600 billion and $1.2 trillion. At best, one-third of the $3.1 trillion needed for a $1,000-per-month UBI.
Texas did not make that mistake with oil. It charged at the source. The wells lasted. The revenue tracked the resource, not the political cycle.
The question is not whether people should receive unconditional cash. The evidence says they should. The question is whether we charge at the wellhead or chase the money after it has scattered.
We answered that question ninety years ago.
The book’s section on the fund walks through the payout math, the governance structure, and what a household of four could expect per month. The section on the missing invoice covers why collection at the source works where redistribution after the fact breaks. Shareholder at Birth: Keep Your UBI, Give Me What’s Mine is available now. If you are new here, start here for an overview.
