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These profits only exist because externalities aren’t being internalized. So no, you are not wrong whatsoever - something is very much off.

by voisin 4y ago

memen 4y ago
Could you elaborate on what externalities and how they are not internalized? Am curious.
- mjhay 4y ago
  There's this thing called "climate change" that's been associated with fossil fuels. If these related externalities were internalized, Exxon would be bankrupted many, many, many times over.
  - dantheman 4y ago
    Why wouldn't the users of the product pay?
    - yarg 4y ago
      It's not just what happens when you burn it, they spill that shit with impunity. https://www.google.com/search?q=niger+delta+oil&tbm=isch https://www.google.com/search?q=niger+delta+oil&tbm=isch
    - voisin 4y ago
      Who (consumer or producers) ultimately shoulders the burden of a tax (in this case, a carbon tax to internalize the externalities I referred to) depends on the price elasticity of demand. If consumers are relatively price inelastic, then they'll shoulder the cost of the tax. If consumers are relatively price elastic (sensitive), then they (at the margins) switch to alternatives and then the producers ultimately pay via lower volumes and tighter profit margins. I think we are seeing what happens when oil increases significantly for a prolonged period - emergence of EVs, switch to heat pumps, etc. etc.
    - mjhay 4y ago
      Then Exxon would go bankrupt by the demand cratering to zero. It's the same result either way.
ZeroGravitas 4y ago
Their usual profits are due to unpriced externalities, but these specific profits are probably windfall profits due to the War in Ukraine. edit: one of the related stories goes in depth on this: "Why are BP, Shell, and other oil giants making so much money right now?” https://www.bbc.co.uk/news/business-64583982 https://www.bbc.co.uk/news/business-64583982
- toomuchtodo 4y ago
  Windfall tax and ship the proceeds to Ukraine? Otherwise, these profits are coming out of nation state budgets for Ukraine military support while O&G captures the profits of the commodity volatility caused by the conflict.

These profits only exist because externalities aren’t being internalized. So no, you are not wrong whatsoever - something is very much off.

by voisin 4y ago

These profits only exist because externalities aren’t being internalized. So no, you are not wrong whatsoever - something is very much off.

memen 4y ago

Could you elaborate on what externalities and how they are not internalized? Am curious.

mjhay 4y ago
There's this thing called "climate change" that's been associated with fossil fuels. If these related externalities were internalized, Exxon would be bankrupted many, many, many times over.
- dantheman 4y ago
  Why wouldn't the users of the product pay?
  - yarg 4y ago
    It's not just what happens when you burn it, they spill that shit with impunity. https://www.google.com/search?q=niger+delta+oil&tbm=isch https://www.google.com/search?q=niger+delta+oil&tbm=isch
  - voisin 4y ago
    Who (consumer or producers) ultimately shoulders the burden of a tax (in this case, a carbon tax to internalize the externalities I referred to) depends on the price elasticity of demand. If consumers are relatively price inelastic, then they'll shoulder the cost of the tax. If consumers are relatively price elastic (sensitive), then they (at the margins) switch to alternatives and then the producers ultimately pay via lower volumes and tighter profit margins. I think we are seeing what happens when oil increases significantly for a prolonged period - emergence of EVs, switch to heat pumps, etc. etc.
  - mjhay 4y ago
    Then Exxon would go bankrupt by the demand cratering to zero. It's the same result either way.

ZeroGravitas 4y ago

Their usual profits are due to unpriced externalities, but these specific profits are probably windfall profits due to the War in Ukraine. edit: one of the related stories goes in depth on this: "Why are BP, Shell, and other oil giants making so much money right now?” https://www.bbc.co.uk/news/business-64583982 https://www.bbc.co.uk/news/business-64583982

toomuchtodo 4y ago
Windfall tax and ship the proceeds to Ukraine? Otherwise, these profits are coming out of nation state budgets for Ukraine military support while O&G captures the profits of the commodity volatility caused by the conflict.