Category Archives: Peak Oil

Education, Peak Oil

We are Teaching Our Economics Students Wrong

In economics, we teach everyone that Land, Labor and Capital are the elements of production. Along the line, we forgot that energy from cheap oil is what made deploying Capital so important. We started to believe that growth was automatic. And we taught that to millions of students.

The U.S. Department of Education shows 4,861 colleges and universities with 18,248,128 students in 2007. We are teaching these students wrong. Millions of students are being taught that finite resources are not important.

The cover of the July 4th edition of Barron’s magazine says Get Ready for $150 Oil:

…As oil producers’ spare capacity gradually declines to worrisome levels, the average monthly price could reach a record $150 per barrel by next spring, with spikes to $165 or $170. With this, $4.50-a-gallon gasoline will become the norm. That will put a huge dent in consumer wallets, while ramping up the desirability of fuel-efficient cars.

Read the rest

Why is this a surprise?

We’ve known about Peak Oil for at least 20 years. How come our whole country was not warned, so we could be preparing?

Maybe this complex society we have built from cheap oil has become too complex to understand?

To look back: In the 1600s, those who owned lots of land were wealthy. The energy that made things grow was the sun. So the more land you had, the more sun energy was working for you. Makes sense.

Then in the 1700s, we started to use metal tools to produce more food and so we had extra people floating around. We organized the extra people in factories, and with steam engines we produced wealth. Okay, that’s understandable. The Industrial Revolution came about and Labor was an important factor of production. So far, so good.

Then in the mid-1800s we started to use cheap oil, and over the next 150 years we built a very complex society. We needed to keep score and deploy resources and so we described that as Capital. And things became very complex.

So what happens as oil starts to decline? It seems to me that the total amount of work the people of the world can do will also decline. Let’s say that instead of a full four quarts of gas, you are sent out to cut down trees with your chainsaw and only three quarts of gas. You will probably produce fewer logs and be less productive.

Hall_murphy_change-in-gdp

I think that is what we can expect to happen to the world economy.

I truly believe that the social science of economics has lost its way.

This is Part One of a three part discussion. See Part Two here.

Geothermal, Peak Oil, Sustainability

A Quandary At HELCO

2 Comments

HELCO issued a Request For Information re: geothermal energy this week.

Although in my opinion Hawaiians are overwhelmingly in favor of geothermal, I am finding, as I ask around, that people are conflicted about HELCO’s intentions.

Hawaiian Electric Company (HECO), the parent company that owns Hawaii Electric Light Company (the Big Island’s HELCO) and the Maui Electric Company (MECO), readily acknowledges that it has a duty to protect the interest of its stockholders.

And when the interests of the stockholders and the interests of the people are in conflict, HECO’s loyalty lies with the stockholders.

That is at the heart of the problems they are having on Moloka‘i and Lana‘i. And it’s at the heart of the problems they deal with when facing the unprecedented future of rising oil prices.

Passing the cost and risk of Peak Oil, as a result of decoupling, straight through to the rate payers – the public – is not comforting to the people.

We need a new model here, one that lines up the needs of the people with the needs of the utility. We need a new model that transforms the utility into an economic driver, rather than an economic impediment. A new model that focuses on a better life for future generations.

People are very uncomfortable with the prospect of handing over, to future generations, a diminished life compared to what they had. We must do better.

There are a thousand reasons why no can. We need to find the one reason why CAN!

Geothermal, Peak Oil, Renewable Energy Sources

Video: Renewable Energy Panel Discussion

1 Comment

Click on the link to watch a 4-minute video with Richard, as well as short videos by the others mentioned below.

VIDEO: Energy Common Sense for Hawaii panel discussion

June 1, 2011

Video by David Corrigan

Respected figures in energy philosophy and industry were given several minutes to express their opinions on the direction Hawaii should be headed at a recent Democratic Party convention in Kona.

A panel of experts and noteworthy advocates for renewable energy spoke to an audience at the Hualalai Academy about two weeks ago.

The panel included farmer and geothermal advocate Richard Ha, Representative Denny Coffman, attorney and Innovations Development Group consultant Mililani Trask, HELCO general manager Jose Dizon, and president of H2 Technologies Guy Toyama.

Read the rest and watch the videos here.

Big Island, Biofuel, Community, Geothermal, Peak Oil

Hawaiian Perspectives in Support of Geothermal

2 Comments

Over the weekend I was on the panel of a Hilo Community meeting called “Hawaiian Perspectives in Support of Geothermal Development.” It was held at the UH Hilo, and I estimate that about 50 people attended. By far the majority of the folks there were in favor of geothermal development, provided it is done in a pono way.

Flyer2-UH-Hilo-Mtg-5.28.11
Each panel member spoke about his/her area of interest.

IMG_0912

From left to right, this is Wallace Ishibashi, co-chair of the Geothermal Working Group, and member of the Royal Order of Kamehameha; Robert Lindsey, Big Island OHA trustee, Geothermal Working Group member; Mililani Trask, Hawaiian legal rights attorney and consultant to Innovations Development Group. 

I talked from the point of view of a banana farmer who, five years ago, found his operating costs rising, and attended three Peak Oil conferences to learn how to position his business in a future of rising oil prices.

I talked about how there are serious outside forces at work. The world has been using twice as much oil as it has been finding, and has been doing so for the last 20 years. The winds of change will soon be blowing and oil prices will be rising. It is very serious, and we cannot afford to insist on individual agendas. It is no longer about us now; it is about future generations.

There are many ways that we can deal with depleting oil.

HECO’s plan of fueling with biofuels will cause electricity rates to rise. Rising electric rates means that folks on the lowest rungs of the economic ladder will be the first to have their lights shut off.

There are people who advocate small scale, individual solutions to energy independence. This approach will encourage those who are able to leave the grid to do so, and leave the folks that are unable to leave to pay for the grid.

Another, much better, alternative is to bring more geothermal on line. Geothermal is proven technology, clean and lower in cost than other base power solutions. The more geothermal we use, the more we protect ourselves from future oil shocks.

I told the group what I had asked Carl Bonham of the University of Hawaii Economic Research Organization: If we can maximize geothermal as our primary source of base power, will we become relatively more competitive to the rest of the world as oil prices rise? He said yes.

I told the group that we are lucky to have the options that we have, especially geothermal. Very few in the world are as lucky.

In modern Hawaiian history, our economy has taken, taken, taken and the culture has given given given. We are at a unique time now when the economy can give and the culture can receive.

Do we dare dream of prosperity for future generations? I believe that most felt that geothermal was the way to get us there.

There are a thousand reasons why “No can.” We are looking for the one reason why “CAN!”

Peak Oil

‘Crazy Economics’ of Oil/Gasoline Explained By Howard Dicus

Oil pricing is affected by many factors, but it’s important to be mindful of long term trends. Such as what I keep reminding you of here: That for the last 20-30 years, the world has been using twice as much oil as it has been finding. Just to keep up with the normal oil decline rate, we would need to find a Saudi Arabia every two-and-a-half years.

Hawaii News Now writer Howard Dicus wrote a very informative blog piece, about what causes oil prices to rise and fall, called The Crazy Economics of Crude Oil and Gasoline: 

The price of crude oil crashed today for reasons so complex and crazy it will surely reinforce your view that mankind has invented markets too complicated to manage.

…As a regular consumer, your encounter with energy prices is pretty straightforward:

  • When you need gasoline, you pay for it on the spot, then you get to use it.
  • When you need electricity, you get to use it, then you have to pay for it a few weeks later.
  • When you buy anything else, you know energy costs are usually buried inside the price.

When crude oil is bought and sold on commodity markets, there is a spot market to buy oil on the spot, but most oil is traded through contracts to deliver oil on a specific date in the future…..

Read the rest here

We are happy to see a decline in oil prices, but like I said, we need to be mindful.

Peak Oil, Uncategorized

‘Train Wreck In Very Slow Motion’

Jeremy Grantham, Chief Investment Officer of GMO Capital, gets it! He would be appalled that Hawai‘i, in the middle of the ocean, seems to feel no vulnerability.

For 20 to 30 years, the world has been using twice as much oil as it’s been finding. The world has fundamentally changed and soon we will pay dearly. Hawai‘i is very vulnerable.

One idea for a solution is biofuels, but that is about feed stock, which involves farmers farming –- and farmers won’t do it for the low payment that is expected.

“Base power” is potentially 85 percent of electricity’s cost, and so we need to concentrate on “base power” in order to get bang for our buck.

Geothermal is a cheap, stable, proven technology “base power.” We need to maximize geothermal for the benefit of all our people, or we will have wasted a valuable resource.

Farmers and other “rubbah slippah folks” clearly understand this. They know that the folks on the lowest rungs of the economic ladder get their lights turned off first.

They also know that folks with money will leave the grid if electricity rates go too high, leaving the rest to pay more.

We should not choose an energy policy that separates us into the “haves” and the “have nots.”

Jeremy Grantham is the Chief Investment Officer of GMO Capital (with over $106 billion in assets under management). He is one of the world’s largest asset managers and articulates the same themes that have been debated on The Oil Drum for the past 6 years.

In his Fall 2008 GMO newsletter, he commented on the underlying causes of the world credit crisis that had just taken place. This article is significant for its content and especially because of who is saying it:

“I ask myself, ‘Why is it that several dozen people saw this crisis coming for years?’ I described it as being like watching a train wreck in very slow motion. It seemed so inevitable and so merciless, and yet the bosses of Merrill Lynch and Citi and even [U.S. Treasury Secretary] Hank Paulson and [Fed Chairman Ben] Bernanke — none of them seemed to see it coming.

I have a theory that people who find themselves running major-league companies are real organization-management types who focus on what they are doing this quarter or this annual budget. They are somewhat impatient, and focused on the present. Seeing these things requires more people with a historical perspective who are more thoughtful and more right-brained — but we end up with an army of left-brained immediate doers (emphasis added).

 So it’s more or less guaranteed that every time we get an outlying, obscure event that has never happened before in history, they are always going to miss it. And the three or four-dozen-odd characters screaming about it are always going to be ignored. . . .

So we kept putting organization people — people who can influence and persuade and cajole — into top jobs that once-in-a-blue-moon take great creativity and historical insight. But they don’t have those skills….”

Read the rest here

Peak Oil

How Do We Know The Oil Field is Depleting?

How do we know that the mega-giant oil field in Saudi Arabia is depleting?

Do we need to know beyond the shadow of a doubt? Even small kids know that when you are in a pasture and you hear hooves, it’s time to run.

An article at the Oil Drum presents a movie on the drilling of Uthmaniyah.

Using a set of wells in a productive (but now rather depleted) slice of this part of the Saudi oil field of Ghawar, it is possible to deduce to drilling sequence of these wells using the identifiers assigned to the wells as they are drilled. Given a few known dates for well placement, a timeline for overall development can be constructed and displayed as an animation. 

The Making of the Movie

Until the early 1990s, all wells (oil, water injectors, gas, etc.) in Saudi Arabia were assigned a numerical ID with the same sequence of numbers for a given field or area. The Ghawar areas are all numbered independently, such that the discovery well in Uthmaniyah is UTMN-1 and the tenth well in ‘Ain Dar is ANDR-10, etc. Under this assumption, a map showing both the locations and IDs of the various wells also gives the drilling sequence. Furthermore, if the drilling of a given well (by ID) can be independently attributed to a specific date, the drilling sequence can be anchored at that date. For example, the first well was placed in Uthmaniyah in around 1951 — thus providing the lower anchor for the sequence. Of course, this depends on the wells used being representative of the entire Uthmaniyah area. Fortunately, this appears to be true in this case. I will discuss below the sources of information and the assumptions made when assigning dates for the various wells.

Read the rest

Community, Peak Oil, Renewable Energy Sources, Schools, Sustainability

The Kids at Kua O Ka La Charter School

1 Comment

High school students from the charter school Kua O Ka La came to Hamakua Springs the other day on a field trip.

HamakuaSprings30

Richard talked about how great it was to connect with that school, which is located on the ocean at Pu‘ala‘a in Puna, right next to the Ahalanui warm pond. “They are off the grid and all their computers are run by solar,” he said. “They have composting toilets that are very sanitary. They live on, and with, the land. I really like their hands-on learning style. They live sustainability.”

From Kua O Ka La’s website:

Pu`ala`a is an intact ancient Hawaiian village complete with historical sites, fishponds, and native habitat that affords an ideal outdoor learning environment for our project-based curriculum.

Kimo Pa, the farm’s manager, told me that he and his wife Tracy Pa were surprised, and pleased, at how interested the students were.

“We told them about what Richard has been working on,” said Kimo, “wondering how we are going to adapt to the new way of doing business, and to the high cost of oil. I talked about how we looked into Peak Oil, studied it for a few years, to really understand it. And how Richard got to the point of looking at geothermal and how he can help the rest of the community.

“We told them we’ve been looking at our resources here. We had water, so we could make hydroelectric….

“I told them that Richard said, ‘What about our workers, the island, the state? What resources do we have that could help the rest of the people?’ That’s how he found geothermal. Now he’s working with Ku‘oko‘a.

“They were really into that part, and had questions,” he said. “This has to do with their community. They’re next to the warm pond. Why is that water hot? Because of the volcano.”

He told the students that our huge dependence on oil now has to do with the leaders we have picked over the years, and their decisions.

“I told them how important they are as an individual, and that it’s their responsibility to pick the leaders; that their vote counts, because they are the future leaders. That their decision making is for the generations under them.”

He showed the students the farm’s hydroponics system, the tomatoes, and the fish they are raising.

“And I explained that we are working with other farmers, and that we like to employ people from nearby,” he said. “Working with other farmers, we can produce more food. We want to fit into the community and grow food for the area. It’s all about the sustainability – taking care of your neighbor, doing the right thing for your community so in the next generation, and the next generation, things don’t get worse.”

It’s a perfect fit with the school’s vision:

Kua O Ka Lā has adopted the concept of `Ke Ala Pono – The Right Path – to describe our goal of nurturing and developing our youth. We believe that every individual has a unique potential and that it is our responsibility to help our students learn to work together within the local community to create a future that is pono – right.

 

Peak Oil, Tomatoes

Out Of Business


Tomatoes

Farming is a challenging business, and getting more challenging every day. That this tomato company in Southern California just halted operations is a good example of that.

Oceanside Pole Tomato Sales Inc., the marketing arm of Harry Singh & Sons, is one of the country’s largest tomato suppliers, packing and selling 4.5 to 5 million cartons of tomatoes a year. Harry Singh & Sons was one of nine companies that make up a Fresno-based cooperative that grows about 90 percent of the country’s fresh tomatoes.

It’s noteworthy that they had to shut down operations so suddenly. According to the article in The Packer, it was due to a “perfect storm of issues,” including labor and water costs, competition from Mexico, California’s regulatory climate and urban encroachment.

As I have often said, “If the farmer makes money, the farmer will farm.” As oil prices rise, I am curious to see if other mainland farmers are feeling economic pressures as well.

From The Packer:

Oceanside focuses on 2012 return with tomatoes

Published on 04/14/2011 06:40PM

Southern California’s Oceanside Pole Tomato Sales Inc., one of the nation’s largest suppliers to retail of vine ripe tomatoes, abruptly halted operations April 12, as did grower Harry Singh & Sons because of “a perfect storm of issues” related to costs.

Barbara Metz, a spokeswoman for Harry Singh & Sons, said April 14 that the company had not gone bankrupt. She said “a perfect storm of issues” including costs of labor and water, competition from Mexico, California’s regulatory climate and urban encroachment had caused the shutdown.

“I’ll be closing down the company in the next few weeks,” said Bill Wilber, Oceanside Pole president, on April 13.

Krishna Singh, general manager of the growing company and grandson of its founder, sent a message to that firm’s employees the same day, explaining that the company would not be operating for the 2011 season.

“I regret to inform you that effective immediately, Harry Singh and Sons Farming Partnership will not be in operation for the 2011 season. … We will work diligently and explore all options in our efforts to reorganize and resume farming operations for 2012,” according to the e-mail message.

The closures of Oceanside Pole and Singh’s growing operation could put a dent in the upcoming season’s vine-ripe category.

Read the rest

Peak Oil

$100 To Fill Your Car With Gas?!

1 Comment

The Star-Advertiser just ran an article about peak oil, using gasoline prices as an example of some of the stark realities ahead of us.

The writer characters a switch to geothermal energy as a “a tough sell, but one that will become easier the first time it costs you $100 to fill up.”

Believers in ‘peak oil’ preparing for when a fill-up costs $100

By Richard Borreca 

POSTED: 01:30 a.m. HST, Apr 12, 2011

Standing in the state Capitol basement is a new symbol that times have changed: an electric vehicle charging station.

Hawaii may have only a few electric cars so far, but state law requires large public parking structures to have at least one charging station. As many as 320 of the 2-foot-tall systems are expected to be installed across the state.

It is part of the answer to the looming crisis of peak oil, which is defined as the time when global oil extraction reaches its maximum rate and the rate of extraction declines….

Read the rest

How much does it cost you these days to fill up your car? Leave a comment and let us know.