We make companies pay for negative externalities all the time. It's one of the main things that government does (making sure that certain parties do not encroach on the rights of the general public). For example, we make companies dispose of chemical waste proper ways, which is expensive. They used to just dump in rivers and swamps. We make car companies meet strict pollutant regulations. Left to their own devices in a competitive market, they would not use catalytic converters and the like because they are expensive and reduce performance. We have building regulations that meet fire codes, which contractors would gladly forgo to make a cheaper house. All of these are variants on the "tragedy of the commons" phenomenon.
Oil and gas companies are currently not held responsible for the CO2 that the use of their product emits into the atmosphere. This is an externaltiy on a global scale and should be treated as such.
I was a bit glib in my comment, so I should clarify--when I say "no industry does that", I mean that we don't hold companies responsible for how their customers use their products. The oil/gas companies are not the ones creating the pollution through the use of their products (yes, they use some for generating the power they use, but it's a small fraction of what gets produced). It's the end consumer who burns it and creates the pollutants. You make a fair point about automotive emissions and the mandates for emissions controls, but the building code point is off the mark--that's not a tragedy of the commons, really, since it's really just between the consumer and the builder (unless you're talking about fire spreading from one building to another). A better comparison would be to point out that we do not require car manufacturers to pay for automotive insurance, nor lumber manufacturers for home insurance.
I want to push back on this, because I don't think that insurance is a good corollary. Insurance i a tool to reduce the impact of a large financial loss. It's different from a known, measurable, consistent output. With insurance, specific large events cause this financial loss to an individual. With climate change we are at a completely different scale wherein the effects are not known but the mechanism is.
One key part of this is that the use of fossil fuels has very predictable CO2 output. We know very precisely how much CO2 a barrel of oil will put in the atmosphere by the end of it's life cycle. Same with gas and coal. So we already know the impact before the goods are used. For home insurance, we have no idea what random events will happen to an individual. So it is up to that individual to do a personal risk assessment and decide for themselves. I know there are caveats with minimum required and such, but the market mechanism of insurance isn't at all like a carbon fee.
This goes back to your proposition that oil and gas companies are not responsible for the pollution. I agree when it comes to pollution but not when it comes to CO2. Pollution is a local(ish) problem and highly variant on process. CO2 is quite steady and predictable. It's not much different than a company selling toys with lead paint saying that the consumer should be testing the toys on their end, because they're not responsible for what is done with the toys. Most people would agree that the company is responsible, and that toys are generally expected to be played with by kids. So we set regulations to make sure toy companies follow guidelines that make their toys safe for regular use. I shop down the toy aisle with reasonable expectation that the products are safe for kids. We do this in all kinds of markets.
Oil/Gas/Coal companies product has one main use, and that's to be burned, and that creates CO2. To me this means that the cost adjustment should be made at this point in the marked. We claim a fee on oil, they pass most or all of that fee onto their customers, and the market adjusts to the new price signals. It's essentially a "disposal fee" priced in because we know how much and where they are disposing it (the atmosphere). Applying this anywhere down market gets way more complicated.
Back to the carbon fee. It is favored by economists; the best way to dis-incentivize the use of something in the market is to make it more expensive. Taxing something where it enters the market is more cost effective than regulating it from the back end.
https://www.econstatement.org/all-signatoriesOn the last part regarding subsidies. I do agree that the subsidies are relatively minimal (at least the direct ones are, but there are some breakdowns that show that there are a lot more in the purchasing chain). And I would imagine that renewable subsidies are larger by %. But regardless, these subsidies are a problem to me. Currently they are the opposite of a carbon fee; they create an artificially low price on a product that we should be trying to limit our use of. There is no reason to have these, regardless of how small they are. It's the principal of the thing.
I was also being pedantic in that you said that "there are no oil/gas specific subsidies" which there are ;)