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Why Dealing With Climate Change Won't Bankrupt Us
Tweet Share on Facebook March 13, 2008 CommentA controversy has broken out in the utility industry over a prediction of how much it might cost the nation to address climate change. It seems that some of the power companies, notably those with less coal in their portfolios, think an Edison Electric Institute-sponsored study exaggerated the downside, with its prediction that there would be a 1 percent to 1.6 percent reduction in GDP by 2015 and 2 percent to 2.5 percent thereafter if Congress adopted the bill sponsored by Republican Sen. John Warner of Virginia and independent Sen. Joseph Lieberman of Connecticut.
Expect more tussles over climate cost-benefit analysis ahead, says Daniel Weiss, director of climate strategy at the Center for American Progress. He argues that most cost-benefit studies of global warming solutions will overestimate the costs and underestimate the benefits, because they are incapable of seeing the dynamic technological progress that inevitably will occur in the future. "These studies base their cost assumptions on existing technologies and practices, which means that they do not account for the vast potential for innovation once binding reductions and deadlines are set," he says.
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Massive Rebuilding Is What's Needed on Energy
Tweet Share on Facebook March 11, 2008 Comment (2)AltEnergyStocks is calling for a Marshall Plan, not a Manhattan Project, for energy. I found this provocative post because the author, Tom Konrad, used as one of the underpinnings of his argument my recent blog post illustrating how deeply divided members of Congress and the administration are on how to spend energy research money.
There are plenty of folks out there calling for a federal commitment on energy similar to the effort that led to the development of the atomic bomb or, more peacefully, man's journey to the moon. Most notable among them are the authors Michael Shellenberger and Ted Nordhaus of the Breakthrough Institute, who call for a $30 billion annual clean-energy investment. James Pethokoukis, my editor and U.S. News Capital Commerce blogger, has predicted that both parties' presidential candidates will launch an Apollo Project platform for energy, although keep in mind he also forecast $60-a-barrel oil this year in that same post. (So far, he's been right about the monster flick Cloverfield, however.)
But Konrad at AltEnergyStocks is in the camp that believes that instead of (or, some say, in addition to) devoting more money to the energy problem in hopes of a breakthrough, there is plenty we can and should do now: "Much more than new scientific resources, we need to leverage our financial and organizational resources to get the needed projects on the ground today," he says. See also this post from Joe Romm at Climate Progress on how "accelerating the deployment of boring old technology" may be more important than space-age-style research.
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Energy Chill Heats Up Pennsylvania Politics
Tweet Share on Facebook March 10, 2008 Comment (2)I spent a few days in my home state of Pennsylvania, where everyone, of course, is braced for spending the next month and a half as the epicenter of presidential politics. The Keystone State, in fact, is a good place for the candidates to witness firsthand the havoc created in the economy by the high price of energy. The Morning Call newspaper in Allentown (where I held my first job out of school 26 years ago, writing obituaries) has this agonizing story of what has happened to some customers who tried to lock in a reasonable price for home heating oil before winter hit. In a word, they got screwed.
The author of the story, Sam Kennedy, talked with one customer who bought her winter heating oil in advance last summer at $2.50 a gallon, which would have been a remarkably smart move. That is, if her heating oil company had stayed in business. However, with cold weather still gripping Pennsylvania's Lehigh Valley, she called for a refill and found that the firm had simply shut its doors and stopped answering calls. Her tank running dry, she had to buy nearly $800 of heating oil at the current market price of $3.17 a gallon. I know I've been harping on this theme, but those economic stimulus checks certainly aren't going to go far in households that have had to pay for heating oil twice.
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Oil Analyst Says Renewables Get Competitive
Tweet Share on Facebook March 6, 2008 Comment (4)Those who believe that oil is running out have a special scorn for prominent oil industry consultant and analyst Daniel Yergin, chairman of Cambridge Energy Research Associates. Yergin, who wrote The Prize, the Pulitzer Prize-winning book that stands as the definitive history of the oil industry, has often dismissed concerns that the world is at or near "peak oil," or the point at which petroleum production will begin an inexorable decline.
Peak Oilers even recently issued a $100,000 wager—not accepted yet—challenging CERA's June 2007 forecast that global oil capacity would rise from its current 91 million barrels per day to 112 million barrels per day by 2017.
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The Bumpy Pathway to an Energy Breakthrough
Tweet Share on Facebook March 5, 2008 Comment (12)Rep. Roscoe Bartlett is one of the founders and, one might say, the lion of Congress's peak oil caucus, a group of lawmakers concerned about the world's oil supply running out. With leonine intensity, the Maryland Republican took on the Bush administration on its funding priorities for energy research and development.
"Why are we interested in hydrogen?" Bartlett pounced, at a contentious budget hearing by the House Committee on Science and Technology's subcommittee on energy and environment.
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Oil Demand Is Dropping, but Prices Aren't
Tweet Share on Facebook March 4, 2008 Comment (7)The buzz in the energy world is that American motorists do finally seem to be responding to high prices and driving less, as reported in the Wall Street Journal (subscription required).
Carbon Tax says the new statistics are "a powerful rebuttal of the notion that gasoline use is inelastic." And the Truth about Cars cites "a shift in both perception and reality" among drivers. Blogging Stocks says "the highly improbable may be happening."
JPMorgan's Global Energy Strategy report notes that the latest figures are the result of the U.S. Energy Information Administration's making a sizable downward revision in its earliest estimates for December 2007 oil demand. Total demand fell 0.4 percent from December 2006 levels, when it earlier had looked as if there had been 2.1 percent year-over-year growth. "On a detrended, deseasonalized basis demand for [gasoline] has not shown consistent above-trend growth since early 2005," JPMorgan notes.
But the chilling news, for both motorists and the U.S. economy, is that both crude oil and gasoline prices are rising anyway.
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Refineries Stagger Into Spring
Tweet Share on Facebook March 3, 2008 Comment (10)Now that the crocuses are out in Washington, D.C., it's time to look for signs of a spring run-up in gasoline prices. The AAA motor club now has the average price of gasoline at about $3.17 per gallon, up from $2.97 per gallon a month ago, but the next few weeks—when prices typically pick up along with driving demand—could be crucial.
One statistic that does not bode well for motorists is that over the past eight weeks, the nation's oil refineries have been working less efficiently than they have, on average, over any of the past 10 years. I averaged the weekly figures that the U.S. Energy Information Administration compiles on refinery capacity use rates:
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