I know little about externality, so you won't get essays from me on the "true" cost of oil. I know that makes y'all sad.

One thing I will say, though, is that there doesn't seem reason to believe that there are better ways to assess and price externality than markets. People want governments to get involved, but really, if a government had enough information to produce positive results, the market would as well (and it would be a little better at it too).

Another thing is that let's say you're really concerned about the negative externality of increased atmospheric carbon and want to do something about it. So, you get all these policies that reduce carbon output significantly enough that the marginal social cost curve drops down and meets the marginal private cost curve (meaning, the negative externality disappears). But then you may find that the increased costs from those policies throughout the rest of the economy are actually greater than they were before (you can find this because all costs are measured in the same terms). Did you solve a problem by eliminating the negative externality of carbon emissions? Not really, because by net the problems increased.