Farming is one of the first industries to see the direct effects of rising oil prices. Fertilizer, pesticides, packaging, irrigation pumping, cooling and transportation costs are all related to oil costs.

Five years ago, when we were planning to diversify our Kea‘au Banana operation, we knew that China was growing and there would consequently be upward pressure on energy costs, so we set up our new cropping systems to prepare for rising energy costs. Oil cost $30 a barrel then. Two years ago we started noticing creeping inflation—our supply costs were rising slowly but steadily. I started reading about energy issues and I realized we were like the proverbial “frog in a pot with the temperature rising,” and that pretty soon we were going to be done. By the beginning of 2007, oil cost was around $60 per barrel.

Last October, I took my annual trip to the Produce Marketing Association trade show, which was in Houston. Coincidentally, the Association for the Study of Peak Oil (ASPO) conference was occurring the following day at the same hotel. I attended. Turns out it was the most important conference I have ever been to. What I know for sure now is that the oil shortage is real. It is happening right now and we need to come to grips with it. It is not about what we wish will happen; it is what will actually happen. It is no longer about us—now it’s about our grandchildren and their children.

I was the only person at the ASPO conference from Hawai‘i and the only one in shorts. By October, oil prices had risen to $80 per barrel. But it was apparent to me that as bleak as the future looks, we in Hawai‘i are very fortunate. First of all, we have sunshine all year long. The sun’s energy helps us grow food and generate electricity—and all year long. And, the biggest deal of all, we have proven geothermal power. Not only to heat houses, as in some places, but to actually generate electricity. I did not have the heart to tell the people I met how fortunate our situation is on the Big Island, let alone that I was going to wear shorts the rest of the winter.

It’s taken nearly three months for the information from this conference to work its way into the mainstream media. In the meantime, at the farm we have been positioning ourselves for a future of oil shortage. Several principles guide us: “The kahuna not going save us.” “Plan for the worst case.” And, most important of all, “Not, ‘no can.’ ‘CAN!’”

We are getting ready to build a hydroelectric plant that will power fifteen 40-foot Matson reefers all day long. This will stabilize our electric bill. We will then convert our farm machinery to electricity wherever possible, using battery-powered forklifts, golf carts, etc. We plan to offer our employees the ability to charge up their plug in hybrid and electric vehicles and a ration of food as an extra benefit of working at Hamakua Springs. And on and on.

We just received our biodiesel kit, which can make biodiesel out of waste vegetable oil from frying tempura. We still remember gas lines, and we want to make sure that our delivery trucks can deliver food on time. We are planning for the worst case scenario. There is no downside to our farm taking this strategic direction.

What about the bigger picture? Can we grow crops for biodiesel and ethanol? Let’s do some quick and dirty calculations. Since there are 42 gallons in a barrel of oil, at $100 per barrel each gallon costs $2.38. There are around eight pounds in a gallon of water—close enough. So, each pound of oil is worth 30 cents. If it takes two pounds of palm nuts to make one pound of oil, the maximum a farmer can expect for farming palm nuts is 15 cents per pound. At three pounds of nuts to make one pound of oil, they’d make 10 cents per pound. So there it is. Farmers aren’t going to farm at those prices. There may be other ways to produce biofuels in a significant scale in the future. Just show us the money.

That leaves electricity as the doable alternative for powering a large part of our transportation and commerce. So, we must seek to lower and stabilize our electricity costs. Besides conservation and changing building codes, we must also start to think of a future of plug in hybrid and electrical cars.

Geothermal energy can produce electricity at less than half the cost of oil and there are other natural sources where the energy source is “free”. That could give us a relative advantage over the mainland, and possibly make us a low-cost, “green” destination for visitors—where we show how maintaining our Hawaiian values in a smart way has made us truly sustainable.

Oil again reached $100 per barrel this week and we must prepare for costs to double and even triple in a few years. We must lower and stabilize our electricity costs by all means. We have the ability to do this. It’s not an option; it’s a necessity. It’s for the sake of our grandchildren’s children.

Not, “no can.” “CAN!”