CIBC World Markets has just released a stunning yet detailed economic analysis of near-term oil prices and impacts. The PDF has some excellent figures I will convert to JPEGs.

The two key pieces are “Getting off the Road–Adjusting to $7 per Gallon Gas in America” and “Oil and Growth–That 70s show Re-Run“. Main points:

• “That additional 200,000 barrels per day pledged from Saudi Arabia is a pittance compared to the four million barrels per day this year that depletion will hive off world production. What little increase in production Saudi is capable of will probably all be gobbled up by that country’s own voracious appetite for energy.”
• China’s recent oil subsidy drop? Another yawner: “Most North Americans would gladly line up at the pumps for China’s now $3.25 a gallon gas.”
• “The only supply response to date has been yet another round of cost overruns and lengthy project delays running the gamut from Canadian oil sands to deepwater Gulf of Mexico wells.”
• “With the basic laws of supply and demand no longer operative in crude oil markets,” CIBC is”compelled to once again raise our target prices for oil” to “an average price of $200 per barrel by 2010.” That “should translate into a near-$7 per gallon pump price within two years, a 70% increase from today’s already record levels.”
• “Higher oil prices spell stagflation for the US economy next year” and beyond. The report has a good analysis of why “The US economy has managed to avoid feeling the full brunt of oil prices over the last few years, but 2009 will be the year that its luck runs out.”

The analysis seems very solid and suggests the only thing that can “save” us from near-$7 gas by 2010 is a major global recession, but even that would only be a temporary respite. The implications for Detroit is staggering:

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“Rethinking the Country Life as Energy Costs Rise,” was the NYT story yesterday:

Suddenly, the economics of American suburban life are under assault as skyrocketing energy prices inflate the costs of reaching, heating and cooling homes on the distant edges of metropolitan areas.

Green acres is the place to be
Farm living is the life for me
Land spreading out, so far and wide
Keep Manhattan, just give me that countryside.

Just off Singing Hills Road, in one of hundreds of two-story homes dotting a former cattle ranch beyond the southern fringes of Denver, Phil Boyle and his family openly wonder if they will have to move close to town to get some relief.

New York is where I’d rather stay
I get allergic smelling hay
I just adore a penthouse view
Darling, I love you,
but give me Park Avenue.

But life on the edges of suburbia is beginning to feel untenable.

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On Tuesday, the utility Delmarva announced a 25-year contract with Bluewater Wind Delaware, a subsidiary of the Babcock & Brown, to purchase 200 megawatts of power from a wind farm that would be constructed 11.5 miles in the Atlantic off Delaware’s Rehoboth Beach. First power is expected in 2012. The contract locks in the price Delmarva will pay per kilowatt-hour. Bluewater has previously built offshore energy near Denmark.

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Today, Sen. John McCain (R-AZ) unveiled the marketing slogan for his incoherent energy policy — the “Lexington Project.” Seven months ago, he promised he would unveil an energy strategy that “won’t be another grab bag of handouts to this or that industry and a full employment act for lobbyists.” With a campaign run by lobbyists, McCain now has broken that promise.

On November 5, 2007, on the campaign trail in Iowa before the presidential primaries, Sen. John McCain (R-AZ) had to come up with an explanation to justify his vigorous opposition to federal subsidies for corn ethanol. He presented himself as ideologically opposed to government spending, saying that he was “proud of the conservative tradition that the government can sometimes best serve the interests of the American people by knowing when to stay out of their way.”

Praising himself for “straight talk” and “being honest,” McCain said he would eventually unveil an “energy strategy” that would break “our reliance on petro-dictators”:

– “I oppose subsidies.”

– “That strategy won’t be another grab bag of handouts to this or that industry and a full employment act for lobbyists.”

– “But it also means no rifle-shot tax breaks for big oil.”

– “It means no line items for hydrogen, no mandates for other renewable fuels, and no big-government debacles like the Dakotas Synfuels plant.”

– “I know that you have heard before that subsidies to oil will be eliminated, only to experience another disappointment.”

Seven months later, the Republican nomination sewn up, McCain has maintained his uncompromising opposition to corn ethanol — but nothing else. In the past few weeks, McCain has unveiled proposals that belie his “straight talk” about energy subsidies, mandates, big-government debacles, tax breaks, and industry handouts.

McCain’s energy plan now calls for a complex array of federal subsidies for nuclear power, coal, offshore oil drilling, low-emission vehicles, wind, hydro and solar power — a sorry parody of progressive policies. The plan calls for government-subsidized experimental coal plants, fuel mandates, and special tax breaks. The plan calls for massive new federal spending initiatives and new commissions to allocate emissions permits worth billions of dollars. In short, it’s exactly the kind of plan he told the voters of Ames, Iowa he would never, ever propose — and exactly the kind of plan he has no record of ever having worked to craft in his twenty-six years in Congress.

Someone sent me the link (here)

Part 1 presented the synopsis of the remarkable new U.S. Climate Change Science Program (aka the Bush Administration) report, Weather and Climate Extremes in a Changing Climate. One central point in the synopsis is

Droughts are becoming more severe in some regions, though there are no clear trends for North America as a whole…. Substantial areas of North America are likely to have more frequent droughts of greater severity.

Seems pretty clear, no? Dry areas will see more evaporation, hence less soil moisture (defined as precipitation minus evaporation), hence more drought. Further, many dry areas will see less precipitation under climate change (due to the expansion of the Hadley Cell and subtropics, see “Australia faces the “permanent dry” — as do we“).

Simply put, dry areas will get drier. The Bush report even summarizes a study I have written a lot about (see “The Century of Drought“):

For example, extreme drought increases from 1% of present day land area (by definition) to 30% by the end of the century in the Hadley Centre AOGCM’s A2 scenario.

[Note: The A2 scenario leads to atmospheric concentrations of CO2 of about 850 ppm by century's end. On our current path, we are headed beyond 1000 ppm (see here).]

On the other hand, climate change science projects also more overall precipitation because the atmosphere will contain more water vapor [see "Global warming causes deluges and flooding, just like the Midwest is seeing (again)"]. Simply put, wet areas will get wetter.

Obviously, a country like the United States will see some areas getting wetter and some areas getting drier, so we would expect to see no clear drought trend for the country as a whole, but much worse weather extremes in different places. Bad news. At least, to some.

But suppose you are a climate change delayer enabler like, oh, I don’t know, Roger Pielke, Jr. How would you summarize the report? Well, you would list a bunch of “remarkable conclusions” that “somehow did not seem to make it into the official press release,” including (remarkably):

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Joint Hearing Between House Select Committee on Energy Independence and Global Warming and House Intelligence Community Management (ICM) Subcommittee

This hearing will be WEBCAST Live -please CLICK HERE to watch.

On Wednesday, June 25, the House Select Committee on Energy Independence and Global Warming and the Intelligence Community Management (ICM) Subcommittee, will hold a joint hearing on “National Security Implications of Global Climate Change.” Members will hear and discuss the results of the first-ever U.S. Government analysis of the security threats posed by global warming.

WHAT: Joint Hearing on the National Security Implications of Global Warming

WHERE: 210 Cannon House Office Building, Washington, DC

WHEN: Wednesday, June 25, 2008, 9:30 AM

WITNESSES:

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Part 1 discussed the pointless and hopelessly impractical $300 million battery prize proposed by the presumptive the GOP nominee. McCain also offered another hot gimmick this week:

My administration will issue a Clean Car Challenge to the automakers of America, in the form of a single and substantial tax credit based on the reduction of carbon emissions. For every automaker who can sell a zero-emissions car, we will commit a 5,000 dollar tax credit for each and every customer who buys that car. For other vehicles, whatever type they may be, the lower the carbon emissions, the higher the tax credit. And these large tax credits will be available to everyone — not just to those who have an accountant to explain it to them.

Now that is both silly and unmanageable. First off, a zero-emissions car would either be a pure electric vehicle or a hydrogen fuel cell car. Neither of those are the kind of near-term or even medium-term solution that we need, that we should encourage, or that we are likely to get (and whether they were actually zero-emissions would depend on how the hydrogen or electricity is made, as discussed below). The serious players are all pursuing plug-in hybrids, as they should be (see “This just in: Hydrogen fuel cell cars are still dead“). Those are not zero-emissions.

Second, “the lower the carbon emissions, the higher the tax credit” is absurd. Once again, Senator McCain and his energy advisers betray how little they understand the issues involved. Let’s look at the two most plausible reduced-emissions fuels: biofuels and electricity. Each of them would be both a bureaucrat’s and an accountant’s nightmare.

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We are standing at the threshold of a revolution in the world energy economy. Or, so we might hope after reading this week’s Economist.

The tell-tale signs of that revolution are documented in a 14-page special section on “The Future of Energy.”

The Economist, a magazine that calls itself a newspaper, began publishing in 1843 to “take part in a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress.”

Its special energy section (June 21-27 edition) delivers a bit of both. But it contains plenty of information that ought to be circulated far beyond the periodical’s regular readership.

The feature’s bottom line (liberally paraphrased) is this:

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The Supreme Court buzz these days is all about the Court’s new “era of good feelings.” That’s dubious, because the central reality remains the same: the Court is deeply divided on fundamental questions about how we lead our lives and govern our country.

Even one more conservative justice would likely push the Court further right than President Bush has managed with two appointments. Bush shifted the Court’s swing vote from Justice O’Connor to Justice Kennedy. Kennedy usually votes with conservatives, but not always. A new conservative justice would likely shift the Court’s fifth vote from Kennedy to Senator McCain’s “model” for a judge, someone like John Roberts or Samuel Alito. These two are conservatives far more reliable than Kennedy.

What would this mean? On the most controversial issues, progressives and moderates would no longer have a shot.

In a new report, the Center for American Progress Action Fund outlines seven areas where the Court is now narrowly divided, and where a new appointee could make a big difference:

1. Taking away the Right to Choose.

2. Slowing the Fight Against Global Warming.

3. Reducing Government’s Ability to Protect Our Water and Air.

4. Eroding Voting Rights.

5. Weakening Civil Rights.

6. Reducing Access to the Courts and Undermining the Rule of Law.

7. Allowing Extreme Applications of the Death Penalty.

These shifts might not be immediate. Chief Justice Roberts and Justice Alito have made clear that they prefer to move slowly. But, on so many issues, moving the Court right is clearly their aim.

Read more here.

Wired magazine used to be the place to go for the latest in technology. But now it covers any sexy techy idea, no matter how impractical.

Given that we all have limited time, Wired should be off every technophile’s must-read list and replaced by Technology Review, which has revamped its stodgy old self and become what once Wired aspired to be.

For me, this started with the absurd cover story by Peter Schwartz 5 years ago, “How Hydrogen Can Save America,” which claimed “What we need is a massive, Apollo-scale effort [$100 billion over ten years] to unlock the potential of hydrogen, a virtually unlimited source of power.” Uhh, no. Hydrogen is an energy carrier, not a source — except for the sun, of course, and if we really want to harness its power we should be placing big bets on solar energy. Try instead my Technology Review piece “The Last Car You Would Ever Buy — Literally.”

Recently Wired published their most misinformed piece, “Inconvenient Truths: Get Ready to Rethink What It Means to Be Green.” RealClimate beat me to the punch debunking Wired‘s bizarre analyses in favor of using air-conditioning and against protecting old-growth forests or buying a Prius (see “Wired Magazine’s Incoherent Truths“). They didn’t debunk Wired‘s claim, “Face It. Nukes Are the Most Climate-Friendly Industrial-Scale Form of Energy,” perhaps because it is so obviously absurd (see The Self-Limiting Future of Nuclear Power).

Now Wired has fallen into the tank containing sharks with lasers by publishing Chris Mooney’s bizarre paeon to geo-engineering and the late Edward Teller and his prot©g© Lowell Wood — famed uber-hawkish promoters of all things dubious.

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When even the nation’s premier business newspaper is confused about your conflicting economic positions, your campaign has jumped the shark. I’d like to think the WSJ read my post on the presumptive GOP nominee’s doubletalk strategy: “Memo to media: McCain doubletalks to woo conservatives and independents at the same time.”

The WSJ really nails McCain. They trot out a variety of euphemisms for “inconsistent” or “baffling” or “incomprehensible” — the favorite journalistic phrase in this regard being “defies easy categorization”:

Senator’s Broad Range Of Energy Policies Defies Categories

Sen. John McCain is putting energy policy at the center of his presidential campaign, embracing a diverse array of positions that defies easy categorization.

He is for more oil drilling and also for alternatives to oil. He wants to drill off the coasts but not in the Arctic National Wildlife Refuge. He supports subsidies for nuclear power and clean-coal technology, but has opposed them for ethanol, solar and wind power.

He wants to lower gasoline prices by temporarily suspending the federal gas tax. But he wants to raise the price of gas with a cap-and-trade system that punishes polluting industries.

In environmentally conscious Portland, Ore., he praised wind power. In Texas oil country he supported more drilling. In rural Missouri he urged more nuclear power. In California he praised fuel-efficiency standards.

An expert from the center-right think tank Center for Strategic and International Studies is even more blunt:

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I am glad that so many in the energy debate have picked up on one of the two messages from my previous post (see EIA bombshell: Offshore drilling “would not have a significant impact on domestic crude oil and natural gas production or prices before 2030″³).

But in listening to the radio and TV debates, I realize that some people have the impression that U.S. Energy Information Administration said offshore drilling might eventually lower oil prices. It did not. It found that allowing offshore drilling would have no significant effect on prices as far out into the future as the analysis projected.

Why should it lower prices? Offshore drilling is projected by EIA to deliver less extra annual oil production in 2030 than Saudi Arabia announced it would add this year, an announcement that had no significant impact whatsoever on oil prices. [In fact, oil prices actually went up -- see yesterday's AP story, "Oil prices rise despite Saudi vow to pump more."]

It is worth nothing that the EIA report “Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf (OCS) is quite analytically substantive and made relatively optimistic assumptions:

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The U.S. Climate Change Science Program (aka the Bush Administration) has issued a must-read report, Weather and Climate Extremes in a Changing Climate. It wouldn’t be must read or even big news if it weren’t for the fact that

• Many environmentalists stopped talking about the extreme weather/global warming link a decade ago.
• The deniers, the delayers, and of course the Roger Pielkes of the world have pushed back against any claims that climate change is driving the extreme weather we see today [as Chico Marx (dressed as Groucho) said "Who you gonna believe, me or your own eyes?"]
• The media has been brow-beaten by the deniers into downplaying the connection. The journalist Ross Gelbspan has a long discussion of this in his great 2004 book, Boiling Point — I will blog on this later.
• The Midwest is experiencing the second “500-year flood” in 13 years. [Don't worry, big media, it's all just a big coincidence like the deniers keep saying.]

This report is really an “I told you so” from NOAA’s National Climatic Data Center and Tom Karl in particular, who has been a real leader in this area, helping to create the still rarely-discussed Climate Extremes Index (see “Global warming causes deluges and flooding, just like the Midwest is seeing (again).”

If you don’t read the whole report, at least read the synopsis:

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Our guest blogger is Adam Jentleson, the Communications and Outreach Director for the Hyde Park Project at the Center for American Progress Action Fund.

John McCain’s record and past proposals raise serious questions about two new energy policies he rolled out today.

The first is the latest in McCain’s series of gimmicks masquerading as serious energy proposals: a contest to see who can create a better electric car battery the fastest. The winner gets $300 million.

A $300 million one-time payment may sound like a lot, but it’s a pittance compared to the $4 billion per-year tax break McCain has proposed giving to the 5 biggest oil companies (including $1.2 billion for Exxon Mobil alone).

If McCain is serious about providing incentives for the developing clean energy technology, why is he doling out much, much bigger incentives for the big oil companies to keep doing business as usual?

The second proposal is a series of new tax incentives to encourage people to buy cleaner cars.

But in the past 6 months, McCain has helped the Republican leadership block clean car tax credits not once, but twice. Both times, McCain had the key swing vote.

On February 6, 2008, there was an effort to add a package of clean energy tax breaks, including a $3000+ tax credit to encourage the purchase of electric, Plug-in Hybrid Vehicles, which can get 100+ miles to the gallon, to the economic stimulus bill. A cloture vote failed, 59-40 with McCain the only absence. McCain’s staff said that he would have “sided with the Republican leaders” in opposing the package.

In December 2007, McCain again could have broken a filibuster and helped the Senate pass the same package of clean car tax credits. But McCain missed the vote, and the effort to break the filibuster and pass the package failed by one vote, 59-40. After the vote, a McCain spokesperson said that McCain “would not have supported breaking the filibuster.”

If McCain were serious about clean car tax incentives, why did he block them twice in the Senate?

So while it’s true that the proposals McCain unveiled today are a lot more attractive than his “cruelly misleading” offshore drilling proposal, his record and the rest of his energy agenda appear to undermine both proposals.

Let’s hope the media reports the whole story.

Joe Romm has additional angles over at Climate Progress.

Twenty years ago today, before he became America’s top climate scientist, NASA’s James Hansen was among the first to warn Congress and the nation about the dangers of human-caused global warming. For a new analysis of that testimony, see Grist here.

Hansen just spoke at the National Press Club, which I attended. He is also giving a briefing to the House Select Committee on Energy Independence & Global Warming. Looks like C-SPAN will skip both. Sad.

You can see look at his presentation and recent postings on his website. Here are some words of wisdom I took from his speech today:

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Our guest blogger is Frank O’Donnell, president of Clean Air Watch.

In yesterday’s New York Times Sunday Magazine, Clive Thompson profiled Duke Energy CEO Jim Rogers in a 5,000-word hagiography entitled “A Green Coal Baron?” According to Thompson, Rogers is “brimming with enthusiasm” for solar power, “one of the electricity industry’s most vocal environmentalists,” with “a nerd’s optimism” for technology ideas that have “fired up” Bill Clinton.

This article truly demonstrates that perhaps no corporate official in America has a better PR machine than Duke’s charlatan CEO.

Yes, he is “charming and natty.”

But his company is leading one of the most vile dirty-air efforts imaginable: it has sued to overturn the effort by the EPA to reduce deadly sulfur dioxide and nitrogen oxides from coal-burning electric power plants like those owned by Duke. (This is one of the few positive moves made by the Bush EPA.) The EPA calculated these cap-and-trade rules would prevent 17,000 premature deaths a year — and yet Rogers wants those requirements thrown out so his company can make a few extra bucks!

And he is the master of doubletalk. His company sought to gut “new source review” requirements for power plants (he lost at the Supreme Court), arguing that “cap and trade” would be a preferable approach to reducing power company emissions. Yet, as noted above, he simultaneously is trying to block “cap and trade” restrictions. What astonishing hypocrisy.

Oh, yes, there’s also the global warming issue. He claims he wants action to reduce emissions, but he bitterly opposed the so-called Lieberman-Warner plan, even though it would have given his company more than a billion dollars in free emission credits. Yet, Rogers wanted even more, and was willing to hold the bill hostage so he could get more. Duke sits on the board of the U.S. Chamber of Commerce, the National Association of Manufacturers, and is a member of American Coalition for Clean Coal Electricity, all of whom vigorously lobbied against the bill with misleading talking points. Duke even rallied corporate customers against the bill, sending out form letters for them to hand to their senators. No wonder it failed so miserably.

We’ll have a new President in January. But Rogers will still be there.

Conservative presidential hopeful John McCain has offered yet more proof he doesn’t understand energy — and more opportunity for the media to salivate over his faux “maverick-ness”:

John McCain hopes to solve the country’s energy crisis with cold hard cash.

The Republican presidential nominee-in-waiting is proposing a $300 million government prize to whomever can develop an automobile battery that far surpasses existing technology….

McCain said such a device should deliver power at 30 percent of current costs and have “the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.”

This idea is almost as bad and almost as cynical as the gas tax holiday (see “Gas tax holiday is cynical and indefensible“).

POINTLESS: First off, every energy and car company on the planet knows they’ll get rich by improving batteries. The world is probably spending $1 billion a year in this quest. This $300 million prize is a pointless gimmick, just a cynical move to get some good PR.

NOT HOW TECHNOLOGY WORKS: You don’t just invent a battery that has the “cost … to leapfrog the commercially available plug-in hybrids or electric cars.” That requires mass production, hundreds of thousands if not millions of batteries produced a year, to get the economies of scale and the benefits of the manufacturing learning curve. When you “invent” the batttery, you do a spreadsheet on what mass production costs would be. It would be a bureaucratic nightmare to try to figure out who would win this. Does the money go to the most plausible spreadsheet?

HASN’T EXXONMOBIL ALREADY SOLVED THIS PROBLEM?

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Since when do we deal with our addiction by going to summits hosted by drug suppliers? Yet here is the Washington Post:

Saudi Arabian Oil Summit Hopes to Isolate Cause of Price Rise

JIDDAH, Saudi Arabia, June 21 — Leaders from oil-producing and oil-consuming nations will meet here Sunday to try to pinpoint the reasons behind the rise in oil prices, which have doubled over the past year, and to find ways to bring them down.

You cannot make this stuff up. I can “pinpoint” the reason prices are high. We are addicted to your product, just like the president said. We will pay any price you charge and do nothing whatsoever to break the addiction. Heck, we will even go to a summit you host to talk about anything but our addiction.

U.S. Energy Secretary Samuel W. Bodman, representing the world’s top oil consumer, said Saturday that insufficient oil production is driving the soaring crude prices. Oil production has not kept up with increasing demand from developing countries including China and India, Bodman said.

Has your head exploded yet? Is Big Media that gullible? Don’t answer that second question. Is the energy secretary unaware that we still use twice as much oil as China and India combined? Is he unaware supply is limited but that his boss has blocked most efforts to reduce demand? (See “Peak Oil? Bring it on!“)

Question for the Energy Secretary: What country’s insatiable thirst for oil imports is most responsible for the tightening world market from 1995 to 2004?

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Then you probably shouldn’t turn to the World Bank, according to David Wheeler from the Center for Global Development. Last week, Wheeler testified before the House as to why the World Bank, with its current state and practices, is not the ideal candidate to oversee the Clean Tech Fund.

President Bush created and authorized $400 million for the Clean Tech Fund to work through the World Bank to finance the additional costs of deploying clean energy technologies. A rare effort by this Administration, the fund aims to be multilateral, reduce greenhouse gas emissions, and engage developing countries.

But as Climate Progress has noted previously, critics do not agree that the World Bank is the best avenue for this effort. It’s large and bureaucratic, and its interests are not always aligned with the (clean) purpose of this fund, as the World Bank also heavily funds coal plants. (Talk about mixed market signals.)

David Wheeler, mentioned above, led the critical cries at a House hearing last week. You can read the details of his testimony at the CGD blog (and watch a quick video), in addition to a forthcoming report by Wheeler and a colleague on the potential of solar thermal in contrast to coal-fired plants.

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