price of natural resources

I was reading Towards a New Socialism and came across this:

"How is the ‘free market’ price of natural resources determined? The classical
answer is that it comes from differential ground rent. In that case the marginal
land or oilfield or forest comes free and the cost of production at the margin1
comes from the labour (and in neoclassical theory, capital) inputs. But the oil from the marginal well is a depletable resource too, and in a market system
this depletion has no price."

I don't understand this. What is differential ground rent? How are the prices of natural resources determined in capitalism? That quote seems to suggest that resources don't have a higher price if they are more scarce. Is that correct?

I always thought it was based on BS commodity speculation

That quote is confusing O_o Unless it is talking about the price the corporations pay to get access to these goods, in which case it is still wrong, because states sell their natural resources at higher prices than just the 'ground rent'. The estimated size of the field, and the market value of the resource (determined by stock prices, if I'm not totally mistaken) have a say in that.

On the consumer side, it's really a mix of taxes and market value (stock prices), which is mostly determined by scarcity and speculation.

In general, the value of natural resources is determined by the amount of labor required to retrieve them. The amount of labor required to mine a pound of gold is much higher than the amount required to mine a pound of coal. Thus, a pound of gold is much more expensive than a pound of coal.

Other things factor into this too of course: speculation, monopolization, etc.

re: differential rent, this is one of the more complex parts of Marx's theory, one of the most overlooked but also one of the most important. The discussion towards the end of Capital Vol III is very abstract and subject to a lot of variables.

Normally, prices of production in industrial production are determined by cost-price plus average rate of profit. Thus they are related to the social average of productivity (socially necessary labour). Prices of production in agriculture (this could also apply to mining) are determined slightly differently based on the cost of production on the worst soil, plus average rate of profit.

The differential rent is the difference between the price of production on the worst soil and that of more productive soils. For example, two capitalist farmers A and B could invest $1000 each in corn production, A in poor soil which generates a yield of crops worth $1200 and the B in fertile land which generates a yield worth $2000.

Thus, the difference in surplus value is down to the natural conditions of production. In this way, natural differences in soil, mineral deposits, etc., can generate increases in surplus value. A portion of this will go to the landowner as rent, with the capitalised income representing the capital value of the land. It's not a contradiction of the labour theory of value. Rather, the natural basis of the productivity of labour changes in different environments.

My picture above is necessarily very simplisitic and there's much more to rent theory than this.