[rayiner]

That’s not how commodity markets, like for oil and gas work. If the entire industry saves $280 billion, they don’t declare a giant dividend. The industry is extremely competitive, and the price of gas is very sensitive to changes in the cost of extracting the gas. If you forced operators to say pay the costs of capping wells up front, those costs would almost entirely be passed onto the consumer.

Since almost everyone uses gas, people are just going to be paying money they saved earlier through cheaper gas. More generally, the “but profits!” view of the world isn’t very useful when applied to highly competitive industries. Yeah, Purdue makes a lot of money in absolute terms, but it makes cents on each chicken. Consumers are the ones that mainly benefit from factory farming in the form of lower prices. Focusing on “profits” overlooks the real economic issue: people like cheap gas, chicken, and other commodities.

Down voters: There is nothing here to “disagree” with. The fact that gas prices closely track costs of extracting oil is not only Econ 101, its well established empirically.

[acjohnson55]

So let it be more expensive by internalizing the costs. Society will adjust. After all, Americans use an astounding amount of energy. I get your point on the competitiveness of the industry, but let's be real, a lot of people are, indeed, making money and socializing the costs.

[rayiner]

I’m not making a normative point about what we should do. I’m describing what’s happening. Econ 101 also tells us that failing to internalize an externality will result in more than an efficient amount of that thing being used, because it’s artificially cheap. So if I were to comment on it, I would support internalizing that cost up front.

Rhetoric about “but profits!” is good for creating narratives and selling newspapers. But it’s not good at actually helping fix the problem. The oil & gas industry has a 5.6% profit margin. Profit is not a relevant discussion when it comes to the oil and gas industry.

Also, insofar as there aren’t good alternatives to oil, oil companies might make even more money if you force them to pay the cost of capping wells ip front. That increases their up-front investment which means they’ll demand a higher return on the backend. The problem is that presidential approval ratings closely track gas prices at the pump, and politicians won’t do anything that will cause gas prices to go up.

This is entirely a decision for consumers to make. Do we want to pay more at the pump know, or pay more in the cost of capping wells 20 years from now?

[__s]

I'd rather pay for my gas when I'm paying for my gas, as opposed to regardless of my consumption of gas. That way there's incentives to reduce consumption

[francisofascii]

Passing the cost onto the consumer is preferable to passing the cost on to future generations, right?

[gumby]

The failure to account for externalities and to couple them to their causes was probably the fundamental failure of communism.

While what you say is mathematically correct, it fails to align the cost with those who received maximal benefit, instead blindly socializing the cost.

Frankly I’d prefer tha the west avoided the mistakes of the Soviet Union and instead assigned liability appropriately.

[srtjstjsj]

1. Then why are energy company CEOs so wealthy?

2. Why does OPEC exist?

3. Why is this at all relevant to the topic at hand?