Privatized profits socialized losses

Getting industry to cap the wells is a hard problem that is being solved, but more slowly than it should be. The problem is these wells were drilled and used when they were producing a lot by massive companies with lots of profits.

Then, when they were less profitable, they were sold to smaller companies with much tighter margins. Then those small companies can’t continue to operate them without losing money and they don’t have enough money to cap the wells, so they abandon them.

If we ask the smaller companies to cap the wells, they’ll go bankrupt, stop buying wells, and disappear. I don’t have a problem with this outcome necessarily, but it won’t get the wells capped because the companies will go bankrupt instead of paying and it will consolidate all oil and gas power to the big companies (close to the current state of affairs, for sure, but this would basically be absolute).

Ideally the big companies that drilled and used the majority of the oil from the well would pay, but mergers and acquisitions can often make that difficult.

For now, states are working to require funds be set aside ahead of time to pay for future well caps and are working to pay to cap abandoned wells directly, which is expensive, but could come from increased industry fees and taxes.

This is definitely going to sound counterproductive, but I think they should have kept the first well they acquired and as a source of income and then used that income to buy and shut down other wells, then cap it.
Make the oil finance its own demise.

Next week: Teens become rich by adopting oil well.