The leasehold is the proper framework for applying George’s theory. What nature created, all men own in common. Government, as the agent for the commons, cannot convey title away from the commons. The freehold is an invalid construct.

The unimproved value can be determined by markets. What another would pay for the usufruct is the “unimproved” value. That bid is the basis for assessing LVT. There would always be an incentive to find “new” land upon which nobody else would bid. There would be an incentive to bid low, as the bid determines the tax.

By George’s reasoning, the oil in place *is* communal property. 100% rate LVT is morally justified, but probably unneccessary.

The market price for oil includes production and delivery. If I discover a barrel of oil on my lease, you would bid something less than the market price of a bbl to obtain rights to my plot.

At 100% rate LVT, the maximum possible benefit of discovering the bbl equals the cost of producing and delivering it to market. In other words, if you can drill better than me, you have an incentive to bid more to assume my lease than I would to keep it. If I am the more efficient driller, you cannot bid the benefit of my discovery away from me.

Since there is profit to be made even at 100% LVT, people would still keep looking for oil.

Of course now I’ve had a few beers it’s clear to me that the value of even unimproved land ought to rise as demand rises.