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No they did not, they invoiced for the oil, not the externalities of its use. Saving a life is an externality just as someone dying from a heat wave.

onion2k 3y ago
Saving a life isn't an externality though. It's very much an 'internality' - it's the reason why people use oil for heating when it's extremely cold. You can't claim people used oil to keep warm and then claim 'not dying from cold' is an external benefit of the product. Edit: Actually you can claim that but only if Exxon weren't aware that not dying from cold is a benefit of heating, like they claim they weren't aware that climate change is a downside of their products. Are you saying people who work in the oil industry are really that stupid?
imtringued 3y ago
You are aware that in economics, prices are supposed to reflect differences in utility and marginal costs, right? If there is an overproduction of a given product then prices tend toward marginal costs, if there is a shortage they tend towards marginal utility. Oil companies tend to be very profitable because they get to monetize their land usage rights over oil bearing land. Their marginal costs are very low, basically just the cost of extraction of what was already there. They don't have to pay the plants. The marginal utility is defined by the best possible uses and guess what, saving a live is one of the best possible uses for a resource so people are willing to pay for it, possibly up to everything they have. Your objection is that the price is somewhere between what the marginal cost and utilities dictate. There is a consumer and a producer surplus and you argue that oil is cheap in comparison to how much people are willing to pay to save a life and this must be some huge consumer surplus that the oil company is responsible for. Except the company isn't responsible for its low marginal costs, it didn't pay the plants it is digging up. The market for life saving oil is oversaturated because there is not much oil that is directly allocated toward saving lives. Burning oil to keep yourself warm on an especially cold day isn't the same as heating your home every winter day so it is as comfortable as the summer. Nor is heating an overly large house life saving. You could have used an electric blanket instead to save your life. Since you only need to heat your own body, the amount of energy is insignificant. So the price of oil is mostly reflecting its low utility (compared to saving a life) and low marginal costs. So it appears that in very specific circumstances the consumer surplus is really high. An objection against consumer surpluses isn't an argument against carbon taxes because they tax the usage, aka the burning, of fossil fuels and not its production. For taxing production you would need a land value tax or a resource extraction tax. Carbon taxes reduce globally harmful uses of fossil fuel at the expense of reducing individual consumer surpluses.
dredmorbius 3y ago
An externality is a value (or a cost) which accrues to an entity other than the buyer of a good or service. "Not freezing to death" is not an externality, it is consumer surplus, that is, surplus value from a transaction which accrues to the consumer in the transaction. <https://www.investopedia.com/terms/e/externality.asp https://www.investopedia.com/terms/e/externality.asp> <https://www.investopedia.com/terms/c/consumer_surplus.asp https://www.investopedia.com/terms/c/consumer_surplus.asp>

onion2k 3y ago

Saving a life isn't an externality though. It's very much an 'internality' - it's the reason why people use oil for heating when it's extremely cold. You can't claim people used oil to keep warm and then claim 'not dying from cold' is an external benefit of the product. Edit: Actually you can claim that but only if Exxon weren't aware that not dying from cold is a benefit of heating, like they claim they weren't aware that climate change is a downside of their products. Are you saying people who work in the oil industry are really that stupid?

imtringued 3y ago

You are aware that in economics, prices are supposed to reflect differences in utility and marginal costs, right? If there is an overproduction of a given product then prices tend toward marginal costs, if there is a shortage they tend towards marginal utility. Oil companies tend to be very profitable because they get to monetize their land usage rights over oil bearing land. Their marginal costs are very low, basically just the cost of extraction of what was already there. They don't have to pay the plants. The marginal utility is defined by the best possible uses and guess what, saving a live is one of the best possible uses for a resource so people are willing to pay for it, possibly up to everything they have. Your objection is that the price is somewhere between what the marginal cost and utilities dictate. There is a consumer and a producer surplus and you argue that oil is cheap in comparison to how much people are willing to pay to save a life and this must be some huge consumer surplus that the oil company is responsible for. Except the company isn't responsible for its low marginal costs, it didn't pay the plants it is digging up. The market for life saving oil is oversaturated because there is not much oil that is directly allocated toward saving lives. Burning oil to keep yourself warm on an especially cold day isn't the same as heating your home every winter day so it is as comfortable as the summer. Nor is heating an overly large house life saving. You could have used an electric blanket instead to save your life. Since you only need to heat your own body, the amount of energy is insignificant. So the price of oil is mostly reflecting its low utility (compared to saving a life) and low marginal costs. So it appears that in very specific circumstances the consumer surplus is really high. An objection against consumer surpluses isn't an argument against carbon taxes because they tax the usage, aka the burning, of fossil fuels and not its production. For taxing production you would need a land value tax or a resource extraction tax. Carbon taxes reduce globally harmful uses of fossil fuel at the expense of reducing individual consumer surpluses.

dredmorbius 3y ago

An externality is a value (or a cost) which accrues to an entity other than the buyer of a good or service. "Not freezing to death" is not an externality, it is consumer surplus, that is, surplus value from a transaction which accrues to the consumer in the transaction. <https://www.investopedia.com/terms/e/externality.asp https://www.investopedia.com/terms/e/externality.asp> <https://www.investopedia.com/terms/c/consumer_surplus.asp https://www.investopedia.com/terms/c/consumer_surplus.asp>