In general I am opposed to state-run nationalized industries: that is definitely the private sector’s place, not the government. But the interaction of rent-seeking politics with the flaws of America’s political system have made me willing to make an exception in the case of America’s oil industry: the increased allocative inefficiency that will flow from government ownership and management is, in my judgement, likely to be much less than the increased political efficiency that will flow from no longer having the energy industry able to purchase enough Representatives and Senators to block needed policy moves that it fears will be adverse to its interests. So nationalize—not to expropriate or to penalize the shareholders, but to get this particular selfish and destructive political voice out of American governance.Aside from my general skepticism about the wisdom of nationalization (which DeLong says he usually shares), there is a fundamental logical problem with his argument: If the energy industry is politically powerful enough to block meaningful climate regulation, then why wouldn't it be politically powerful enough to block outright nationalization?
Aside from that problem, government ownership of energy companies would likely result in regulatory conflicts of interest, which have historically arisen whenever governments have attempted to regulate, e.g., for environmental protection, industries in which they hold a direct economic stake. Invariably, the regulators lose out to other bureaucrats who want to maximize production. For that reason (among others) it really is best for polluting companies to be privately owned but government regulated.