Incredibly volatile oil contracts closed up a little bit at the end of the day yesterday, but they've stayed in the mid-$120s, down from their $140-plus peak, and the corresponding slide in gas prices continues:

That's the AAA gas price graph for New Mexico, showing the July peak and the cheerful slide.

The question of "offsets" is one of the central areas of debate in the development of a greenhouse gas reduction plan as part of the Western Climate Initiative, a process in which New Mexico is involved.

The idea is to cap emissions from big industries like coal-burning power plants, then allow trading of emissions credits among the various players to allow the marketplace to determine the most economical way to reduce emissions.

The idea of "offsets" is that it may be cheaper to eliminate emissions somewhere else, rather than at the power plant - by reducing methane emissions from a landfill, for example. But offsets offer some potential for abuse, as this note from the Wall Street Journal last week points out:

So this is the Kyoto Protocol in action: A marginally-economical chemical factory in an industrial superpower finally installs 1970s-era technology to clean up its act, and as a result makes 30 times more money by selling “carbon credits” to fight global warming than it makes by selling chemicals.

It's one example of why crafting a policy solution to the problem of reducing greenhouse gas emissions is hard. I'll have a story in the newspaper soon on the WCI effort (perhaps this weekend?), but if you don't want to wait, Marjorie Childress did a nice story last week on the Independent.