Following on from the debate surrounding encouraging local people to allow fracking, the US is held up as a paragon of free market virtue.
Here's what Lynn had to say.
" To create the kind of vibrant, fast-growing industry that has slashed the cost of energy in the US, and will soon make it self-sufficient again."
"It is not just the industry itself that is valuable. In the US, shale has dramatically reduced energy costs, and that has led to a revival of the manufacturing industry."
"One reason the industry has developed so fast in the US is that under American law the oil and gas is owned by the people under whose land it is discovered. If a developer finds it under your property, you make a fortune"
"If the shale industry gets going, it won’t be the exploration licences that bring in the big money, it will be the tax on the energy produced, on the people working the rigs, and on the far larger number of jobs created by having significantly lower energy costs than our main industrial competitors. That is far more valuable in the medium-term than the revenues generated from exploration licences."
What Lynn conveniently neglects to mention, is the US has, with a few exceptions, an export ban on unrefined oil and gas. See here.
This causes a drop in the price, and by doing so, acts as a defacto land tax. You can see why this approach is attractive in the US. Firstly, it side steps the whole thorny issue of property rights, and there is no visible taxation. Good Commie free stuff. It also means there is a shortage of refined product abroad, which they can export, presumably at a mark up. Which can be taxed.
Sneaky, but hardly free market.
There is movement to loosen up these rules. In which case prices in the US will rise, landowners won't just be making an unearned fortune, but a bloody great unearned fortune.
Lynn then contradicts himself in the space of the same sentence. If the big money is the upstream taxes, prices would have to rise. Yet he then says prices will fall. Doh!
The truth is, unless we ban exports and produce a significant % of our LPG needs, we will be paying Global prices. Which are still set to rise. Do we want to do it like they do in the US?
I'd say we are best of with a free market approach. And the monopolization of natural resources through exclusive property rights are incompatible (even if they can be somewhat mitigated by tax) with that ideal.
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