Gas prices have settled a bit around the $3 per gallon level. And, contrary to last week’s confusing post on this question (hey, I’m a newbie on this whole energy economics thing), apparently this enormous price of oil by the barrel means refiners are not making enough money to send their kids to private school and also make the payments on the condo in Vail. From TWIP:

[N]et income and margins for large refiners were lower in the third quarter of 2007 than in the third quarter of 2005 and 2006. In fact, net income for this group of companies during the third quarter (in real terms, adjusted to Q307 dollars) was very similar to net income over the 2000 through 2004 period.

On whether advocates of reducing greenhouse emissions should be celebrating the compromise energy bill announced over the weekend.

I ran across two interesting comments in the blogworld yesterday in response to the new McKinsey report on U.S. greenhouse emissions opportunities. The report lays out a lot of enticing cost-benefit analyses of various greenhouse gas emissions options throughout the U.S. economy.

The first came from Grist commenter Sean Casten:

I agree – great message, but it hugely understates the potential to increase generation efficiency. Maybe that’s just because they didn’t know to look for it, but I get nervous by any report sponsored by a bunch of utilities (National Grid and DTE were listed among their sponsors). But this is nitpicky – overall, great report.

The second came from veteran science journalist Charles Petit, on the Knight Science Journalism blog:

Better attention to efficiency and smart investment in renewables, etc., could trim up to 28 percent of the nation’s greenhouse emissions with little upfront cost and a fast, quickly profitable payback. This is not news to people at, say, such national labs as Oak Ridge, Berkeley, Livermore, etc. who have been cranking out fruitless and similar studies for years. Maybe these biz suits will give such findings more street cred.

I think Petit gets it precisely right and Casten gets it precisely wrong.

Different people with different interests, beliefs, values and viewpoints will have different views of the definition of the climate problem, the energy system, and the costs and benefits of various approaches to dealing with it. That’s one consequence of climate change being a wicked problem. What’s increasingly interesting to me is not what any one player views as “the correct” solution to the problem, but rather what is the solution space that can draw sufficient support from those with those different interests, beliefs, values and viewpoints to actually happen.

In that regard, Casten is wrong to be suspicious that energy companies were involved in the preparation of the McKinsey report. He should rather embrace it. It doesn’t mean he has to agree with the answers they came up with, but the fact that he seems to like the report despite their involvements means he ought to embrace their participation. Any solution space that doesn’t include those interests is likely doomed to failure.

According to an Ernst and Young analysis, things are getting a little gnarly out on the biofuels frontier. From Platts:

The global biofuels industry has seen a slowdown in growth over the third
quarter of 2007, caused by rising feedstock prices and a rapid expansion in
capacity that may outstrip demand, according to an Ernst & Young report
released Friday....

The industry is also being hampered by the high-profile debate over the
potential conflict of first-generation biofuels on food prices and
sustainability concerns, the report said.

					

TWIP this week explains the disconnect between the rise in the price of oil and the rise in the price of gasoline:

 The main reason for the surge in gasoline prices over crude oil seems to have been unusually extensive U.S. refinery outages, which also pushed the limits of gasoline import availability. In the face of rising demand for gasoline and distillate products (e.g., diesel fuel and heating oil), supply was not able to keep up, thus drawing product inventories down, while the price differential to crude oil widened.