Well, yes, externalities should be paid for, this is true:
A paper by the New Economics Foundation in 2006 used government estimates of the cost of carbon emissions to calculate the liabilities of Shell and BP. It found that while the two companies had just posted profits of £25bn, they had incurred costs in the same year of £46.5bn. The oil leaking into the Gulf of Mexico from the Deepwater Horizon well is scarcely more damaging, and its eventual impacts scarcely more expensive, than the oil that is captured by neighbouring rigs then processed and burnt as intended……….
There is an alternative, but it is unlikely to materialise. Just as Norway has treated its oil money not as profit but as provision against a tougher future, so the governments in whose territories oil companies work should force them to pay into a decommissioning fund. The levy should reflect the costs that economists are able to calculate, plus a contingency for those we can\’t yet foresee.
This would outrage the oil firms, as it would render many of them unprofitable. But there\’s a simple answer to that: the money currently defined as profit is nothing of the kind.
But to say that the externalities of the use of oil should be paid by the companies doing the drilling for oil isn\’t quite true. They might not be a bad place to collect them, it being fairly simple at that stage of the process. But the costs of those externalities should be bourne by those who use the oil brought up, not purely by the capitalists who are bringing it up.
And of course there are already mechanisms in place to do this. Take us in the UK, just as one example. We have fuel duty. And part of that fuel duty is to \”meet our Rio committments\” in Ken Clarke\’s phrase as he brought in the fuel duty escalator. From the Stern Review we know what the climate change externality of the use of a litre of petrol is: 11p. The fuel duty imposed by the escalator on that same litre is some 23p.
The externalities are paid for, are included in market prices. And the externalities are paid for by the right people as well: the users who are creating the externalities.
We are, in fact, already doing what is being urged.