Part 2 began an analysis of the bipartisan compromise proposed by the Gang-of-10 Senators, suggesting that deal isn’t so bad. The other evidence the deal isn’t so bad is that the House GOP is threatening to refuse to vote for it (see “Part 2.5“).

The good of the 5-year extension of the renewable tax credits certainly beats the “bad” of doubly de minimis drilling. But what about the rest of the deal?

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Offsets
The $84 billion in investments in conservation and efficiency in the New Era bill will be fully offset with loophole closers and other revenues. Approximately $30 billion will come from new revenues from the oil and gas industry through such measures as modifying the Section 199 manufacturing deduction for oil and natural gas production and other appropriate measures to ensure that the federal government receives its fair share of revenue from Gulf of Mexico leases. Remaining offsets will be finalized in consultation with the Finance Committee after accounting for interaction effects with other pending legislation.

Pretty amazing, really. This bill is going to be paid for in part by “Repealing a tax break for oil companies that Democrats have long called for,” as CNN put it. This is probably a deal killer for those taking millions of dollars in contributions from Big Oil, like McCain.

And there is even more pretty good stuff, depending on exactly how the final bill is written:

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The National Clean Energy Summit at the University of Nevada Las Vegas began on Monday afternoon with an inspiring speech by former President Bill Clinton [pictured above with Center for American Progress Action Fund (CAPAF) President John Podesta]. The Summit is sponsored by Sen. Harry Reid (D-NV), CAPAF, and UNLV. Clinton spoke before 900 Summit attendees.

President Clinton’s speech included a new and important idea: create energy independent areas. These places would rely on renewables, efficiency, and home grown energy. These places would then prove to the rest of the world that energy independence built on clean energy can occur, and would lead to economic growth. He touted the strong economic potential of renewable energy, citing an example from nearby California “Recently the state of California commissioned a study…which showed that building a 100 megawatt solar thermal plant would provide ten times the economic benefit of a comparable coal-fired power plant. It would create 4000 person-years of employment, and a net, NET, $628 million of economic benefit.” In pursuing clean energy projects worldwide, he suggested the following places:

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As Sen. John McCain (R-AZ) sets foot on a drilling rig off the coast of Louisiana, his “drill everywhere” message is being amplified by political spending of more than two million dollars a day by the oil and coal industries. The Public Campaign Action Fund has released a major report finding that King Coal and Big Oil have united in an attempt to buy the future:

We estimate that the coal and oil industries spent an astounding $427.2 million over the first six months of 2008 to influence public opinion and public policy.

These industries are on track to spend about a billion dollars influencing energy policy this year, with their “clean coal” and “drill drill drill” messaging. They are supporting pollution-friendly candidates and spreading false doubt about the seriousness of global warming.

This total includes the $12.2 million dollars spent in six months by Newt Gingrich’s billionaire-and-coal-funded 527 corporation, American Solutions for Winning the Future (ASWF), on its “Drill Here, Drill Now” campaign, and the $40 million that coal industry front group Americans for Balanced Energy Choices (now part of the American Coalition for Clean Coal Electricity) pledged to spend influencing the public. It also includes John McCain’s million-dollar haul from the oil and gas industry.

The Public Campaign Action Fund’s estimate of $427.2 million fails to include the expenditures of pollution-agenda front groups that are “organized under sections of the Internal Revenue Code that do not require the public disclosure of their spending.” These groups include the likes of:

• Alliance for Energy and Economic Growth
• American Council for Capital Formation
• American Energy Alliance
• American Enterprise Institute
• Americans for Prosperity
• American Future Fund
• Business & Media Institute
• Coalition for Affordable American Energy
• Competitive Enterprise Institute
• FreedomWorks
• Heartland Institute
• Institute for Energy Research
• National Association of Manufacturers
• U.S. Chamber of Commerce

Therefore the Public Campaign’s estimate is rather conservative.

I am participating in an online debate sponsored by the Economist on the “Global energy crisis.” The proposition being debated Oxford-style is:

“This house believes that we can solve our energy problems with existing technologies today, without the need for breakthrough innovations.”

Needless to say, I am taking the “Pro” side.

There is voting by the public for both Pro and Con. Although online voting is about as scientific as a typical argument from a global warming denier, I’d always rather win than lose (or, worse, statistically tie and then have the judges redo the calculation and give the gold to some underage host-country gymnast who screwed up their dismount, but I digress).

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You know your product is in trouble when the housing analogies come out:

The market for sport utility vehicles is starting to look a lot like the housing market, spreading pain to consumers, automakers and dealers….

I am not sure this post qualifies as schadenfreude — since that has been defined as “largely unanticipated delight in the suffering of another which is cognized as trivial and/or appropriate.” There is nothing unanticipated about high oil prices (see “My 1996 warnings and predictions: “MidEast Oil Forever?” — Part I: Drifting Toward Disaster“).

That is, the death of SUVs isn’t like, say, Martha Stewart going to jail. What has happened to SUVs — “Sales of S.U.V.’s are down 32 percent so far this year, and were off 43 percent for July” — was inevitable.

Well, in July, General Motors dealers had a 174-day supply of the Yukon XL/Suburban on hand, on average, up from a 92-day supply a year earlier. Inventory of the Chevrolet C/K Suburban nearly doubled over the same period, to 116 days from 63 days.

Just like hapless homeowners, countless car owners are now “underwater,” driving vehicles that are worth less than the balance on their car loans. And just like desperate homeowners, the sellers of S.U.V.’s are having to painfully cut asking prices.

How bad is it?

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