Which 'Oil Power' University Threatens Harvard's Status as the 'World's Richest University'?

[Image source=AP Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The status of Harvard University, the richest university in the world, is under threat. The University of Texas is closely trailing behind as it is reaping 'oil money' amid soaring oil prices. While most universities generate revenue mainly through donations, the University of Texas, which owns land containing oil secured over 200 years ago, is smiling every time oil prices rise.

On the 23rd (local time), Bloomberg reported that the University of Texas is expected to record its highest-ever revenue in the 2022 fiscal year, stating that Harvard's position as the 'world's richest school' is now facing a challenger in the University of Texas. As of June last year, Harvard and the University of Texas had revenues of $53.2 billion (about 71.3 trillion KRW) and $42.9 billion respectively, but Bloomberg forecasts that the University of Texas will narrow this gap this year.

The University of Texas had already completely surpassed Yale, which was ranked second among wealthy U.S. universities in 2018 amid rising international oil prices, and currently holds that position. Harvard is expected to see somewhat slower revenue growth in line with the overall decline in university donations. Bloomberg reported that among the eight prestigious Ivy League universities in the U.S., Harvard had the lowest annual return over the past 10 years as of June last year.

The University of Texas owns 2.1 million acres of land within the Permian Basin, the largest oil field in the U.S. The university leases this land to over 250 oil companies, including ConocoPhillips and Continental Resources, generating related income. This year, due to Russia's invasion of Ukraine, oil prices surpassed $120 per barrel in June, and with increased crude oil production in the Permian Basin, the University of Texas is expected to earn significant profits.

To understand how the University of Texas came to own this land, one must go back over 200 years. According to Bloomberg, Texas secured this land in the 1800s to support higher education facilities in the region. When the University of Texas first received this land, it was dry and rocky and was used as pastureland for cattle, generating some income. However, in May 1923, drillers flocked to the area, turning it into land where oil could be secured, and it has since transformed into a region equipped with drilling rigs and other facilities.

The area produces about 300,000 barrels of crude oil per day. This amount is comparable to 20% of the crude oil produced worldwide by ExxonMobil, the largest oil company in the U.S. Bloomberg reported that the University of Texas receives an average royalty of 22.3% per barrel from oil production in this region.

However, amid global efforts to address climate change, criticism has arisen over the university’s social responsibility being neglected as it profits from oil and related resources. In particular, concerns have been raised about whether the University of Texas’s activities are appropriate given the severe environmental degradation in the Texas region. Luke Metzger, director of the public interest group Environment Texas, said, "(The University of Texas’s oil-related revenue) is money earned by fueling the climate crisis," adding, "Many students and faculty probably do not know where the funds come from, and when they realize it, they will be shocked and many will oppose this 'dirty money.'"

In response, William Murphy, CEO in charge of land-related affairs at the University of Texas, argued, "We are making efforts to reduce methane emissions and conduct hundreds of emission-related investigations every year," and added, "We have invested significant funds in measures to prevent groundwater waste across the University of Texas’s land area."

This content was produced with the assistance of AI translation services.