Pennzoil Oil City refinery explosion

The lecture's central developed case. A welder was killed when a tank in the tank yard exploded. The forensic visit revealed that the ground was saturated with oil to a depth of two feet from ninety years of routine spills. Tom's insight, arrived at over breakfast the morning after, was that Pennzoil's continued operation of the dilapidated refinery was rational under externality pressure: closing it would convert it to a Superfund site and trigger taxpayer-then-stockholder cleanup liability. The refinery was eventually closed.

I'll give you one more economic externality. Back in the mid to late 90s, I got a call because a woman was welding on a tank at the Oil City refinery of Pennzoil. This is a picture postcard from around 1910 of the Oil City, Pennsylvania refinery. It's just down the river from Titusville, where Edwin Drake discovered oil and drilled for it in 1856. So this was a hundred-year-old refinery when I went to visit in 1996. It was ancient, right there on the river. They were welding on one of the tanks in the tank yard.