Hawai‘i is facing a triple whammy of declining world oil supplies.
The net energy left over from our efforts to produce that oil is decreasing as it becomes more difficult to get.
We are near to, or maybe past, the peak of world oil production.
Past the peak, we face a steady decline in net energy on top of the decline in gross volume. In addition, oil-exporting countries will need to divert oil to subsidize their own populations, or their politicians will get thrown out of office.
Hundred dollar oil has been expected to have a recessionary effect.
On television last night, the Hawai‘i State Department of Taxation’s Council of Revenue gave a supplementary report on the effect of the Japan earthquake and resulting calamities on Hawai‘i’s economy. Chairman Paul Brewbaker said that there was an effect, but that a surprising general decline in tax collection had a larger effect. He said we should be aware of the decline, although he also pointed out that one month does not a trend make.
Two days ago, a Christian Science Monitor article explained that although there was a general rise in income during the last quarter, disposable income dropped due to a rise in fuel and food prices. The reduction in disposable income is close to wiping out the recent gains in income, and threatens our ongoing economic recovery:
By Mark Trumbull, Staff writer / March 28, 2011
American incomes continued to rise in February, but not enough to offset rising prices at the gas pump and grocery stores. The unwelcome shift points to a potential danger spot in the economic recovery – the risk that inflation could chip away at consumer well-being.
Overall, income from employment and other sources rose 0.3 percent in the US in February, on par with the trend over the past half year or so, according to a report released Monday from the Commerce Department. Consumer spending rose even faster, by 0.7 percent – partially due to growing confidence in the staying-power of an economic recovery.
But as the recovery has taken hold, so has an upward trend in prices for basic commodities like grains and gasoline. In February, US consumers were basically forced to spend more because of rising prices for groceries and fuel. Adjusted for consumer-price inflation, the gains in household earnings disappeared, with “real” disposable personal income actually falling 0.1 percent for the month…. Read the rest here
Gail Tverberg explains what is going on at the Oil Drum:
Posted by Gail the Actuary on March 28, 2011 – 10:39am
The idea that high oil prices cause recessions shouldn’t be any surprise to those who have been following my writings, those of Dave Murphy, or those of Jeff Rubin. Last month, though, the Wall Street Journal finally decided to mention the idea to its readers, in an article called “Rising Oil Prices Raise the Specter Of a Double Dip“. The quote they highlight as a “call out” is
When consumers spend more at the pump, they often cut back on discretionary purchases.
The WSJ shows this graph, linking oil price hikes to recessions:
Figure 1. Wall Street Journal graphic showing connection between oil price rise and recession.
Having been to three national Peak Oil conferences, I am not surprised to see a decline in economic activity associated with the recent rise in oil prices. It’s the new normal.
I wrote this post in October 2007 about a Food Summit I spoke at. Now that oil supplies are getting tighter, it’s a lot clearer and makes even more sense.
My assessment of how we came to be here and where we need to be in the future is this: In the beginning, one hundred percent of the energy for food came from the sun. The mastodons ate leaves, the saber tooth tiger ate the mastodon and we ate the tiger and everything else.
The earth’s population was related to the amount of food we could gather or catch. And sometimes the food caught and ate us. So there were only so many of us roaming around.
Then some of us started to use horses and mules to help us grow food. As well as the sun, now animals provided some of the energy for cultivating food. We were able to grow more food, and so there were more of us.
About 150 years ago, we discovered oil. With oil we could utilize millions of horsepower to grow food—and we didn’t even need horses. Oil was plentiful and cheap; only about $3/barrel. We used oil to manufacture fertilizer, chemicals and for packaging and transportation.
Food became very, very plentiful and we started going to supermarkets to harvest and hunt for our food. Hunting for our food at the supermarkets was very good—the food did not eat us; and now there are many, many, many of us.
But now we are approaching another change to the status quo—a situation being called “Peak Oil.” That’s when half of all the oil in existence is used up. Half the oil will still be left, but it will be increasingly hard to tap. At some point, the demand for oil—by billions and billions of people who cannot wait to get in their car and drive to McDonalds—will exceed the ability to pump that oil.
I told the Food Summit attendees that we farmers need to grow plenty of food so that others can do what they do and so we continue to have a vibrant society. If we don’t plan ahead to provide enough food, and as a consequence every family has to return to farming to feed themselves, it would be a much more limited society. People would not be able to pursue the arts, write books, explore space. We would have way fewer choices – maybe only, “What color malo (loincloth) should I wear today?”
Two years ago, oil hit $100 per barrel and I wrote the blog post The Kahuna Not Going Save Us. I was the only person from Hawai‘i who had attended the Peak Oil conference in Houston a couple months before.
Fast forward: Aloha Airlines is gone. Hilo’s O’Keefe Bakery is gone. The Middle East is in turmoil. Our county, state and national governments are saddled with enormous debt.
Our fundamental problem is that for more than 30 years now, the world has been using twice as much oil as it has found.
In Hawai‘i, though, we have a solution that can take us all the way to prosperity, relative to the rest of the world.
We have the gift of geothermal, and we need to use it. We only need a small amount of the energy being used to create our islands, a process that has been going on for millions of years, almost from the time humans started to walk upright.
We need to determine our desired outcome. It is not just getting off oil. We need to think bigger.
How about we think about moving to a place where the aloha spirit thrives? How about arming our future generations with the tools they’ll need by using our brains now? How about giving people the ability to get off the streets and to a place where they can support their families in their own homes?
The folks on Kino‘ole Street understand this very clearly. They are ready to go.
We need to close our oil-fired electricity generating plants and start making these changes now. We need low-cost, stable electricity relative to the rest of the world. Capital loves stability. If we do this, capital will be clamoring to come here. The folks on Bishop Street understand this clearly.
How about stepping forward now!
In a world filled with instability, we will have the attention of Wall Street.
The kahuna not going save us. Tutu Pele can, though.
Richard and some of his Ku‘oko‘a partners spoke at a well-attended Kona Town Meeting the other day, and what an interesting meeting it was.
Watch a video of the talks, taken by Big Island Video News: Ku’oko’a details bid to buy HEI at Kona Town Meeting.
Geothermal energy touted as last hope for Hawaii energy future
Video by David Corrigan | Voice of Stephanie Salazar
Its been several weeks since the Geothermal Working Group submitted their preliminary report to the 2011 State Legislature.
Its also been weeks since the co-chair of that effort, Hamakua farmer Richard Ha, made public his lofty goal of buying HELCO, the island’s power company, along with some partners.
At a well attended Kona Town Meeting on Tuesday night, residents got the chance to hear the details about both of these developments, first hand….See the rest
The whole thing is worth a listen. You’ll hear Richard start speaking at 3:41 and then enthusiastic applause breaks out at around 4:50 when he says, “Maybe what we need to do is buy the electric utility out.”
Right here, right now, we have the ability to change this.
We can change things so the economy will give, give, give, and the culture – the people – will receive.
If we are successful in supplying the biggest proportion of our electrical base power from stable and inexpensive geothermal resources, thereby replacing oil, Hawai‘i will become relatively more competitive to the rest of the world, and, relative to the rest of the world, our standard of living here will rise.
I’ve written here before that I am involved with Ku‘oko‘a. It’s an idea whose time has come.
Lots of people have asked how they can help. Check out the Ku‘oko‘a website, where we will be posting ways you can help free Hawai‘i from fossil fuels, and at the same time help to raise the standard of living for our keiki.
I wrote more about The Geothermal Working Group’ Interim Report here at the blog:
There is an urgency to developing new energy resources because Hawai‘i, like most of the world, is overwhelmingly dependent upon depleting supplies of fossil fuels. The consensus among credible resource scientists and many economists is that petroleum prices will rise to unprecedented levels in a few years. Since Big Island uses oil for 90 percent of its power, this is of the utmost concern to leaders in government and business. Hawai‘i is the most petroleum-dependent state in the nation; the Big Island alone exports $1 billion annually to purchase oil for power. Geothermal is viewed as an important component in a suite of local and available energy resources. Read the rest
This is not about us. It is about future generations.
It’s a sign of the times.
The current unrest in Egypt is largely due to rising food and fuel costs. More and more of this will occur as oil prices rise.
That link above is to a very interesting pdf from the Association for the Study of Peak Oil and Gas. It analyzes the current situation in Egypt in great detail.
We must maximize our geothermal resource to protect Hawai‘i.
We could use your support.
HB 1257 is going to be heard by Rep. Herkes’ Consumer Protection Committee.
Read the bill here. Here is where I discussed the bill.
Send testimony in support of HB 1257 to CPCtestimony@Capitol.hawaii.gov. It should be less than five pages in length; couple sentences plenty.
This bill’s essential elements are simple. It requires the PUC to consider the following three factors when it issues approvals for electricity generation:
Persons wishing to offer comments should submit testimony at least 24 hours prior to the February 2nd hearing with a transmittal cover indicating:
Please send this to your friends, too. Mahalo.
Michele Galimba of Kuahiwi Farms recently wrote about biofuels to be produced in Ka‘u:
…To be blunt, there are big gaping holes in their business model as far as their agricultural/harvesting expertise. They really don’t know what they are doing, especially in respect to the actual physical costs of growing and re-growing biomass. It’s not something I hold against them very much. Ignorance of biological reality is rampant. On the other hand, ignorance does not inspire confidence. Is it okay for them to blunder into our neighborhood armed with a HECO contract, federal funding, and an amorphous plan? I really don’t know.…. Read the rest
On the mainland, biofuel guys are paying $100 per ton for feedstock (which includes $45/ton of subsidies). But farmers in Hawai‘i are making $75 for a bale of hay now, each of which weighs 500 lbs. So right now, farmers are making $300/ton. The biofuel guys want to pay $100/ton.
Farmers would rather make $300/ton than $100/ton. Duh! Somebody will have to pay the farmers more.
On the other hand, geothermal is very straightforward. It is inexpensive, 7 to 10 cents per kWh, and it is steady. It does not emit greenhouse gases, it is proven technology and requires no subsidies.
We hope that for electricity generation, biofuels do not crowd out geothermal.
For each unit of energy in, biofuels yield 1.2 or less units of net energy out. This puts us in mind of Easter Island.
In comparison, for each unit of energy in, geothermal yields 10 units of energy out, and that will continue for as long as one can imagine.
With that sort of cheap, stable electricity, capital would rush here from all over the world. And everyone would have jobs!
It is estimated that the Big Island will be over the “hot spot” that gives us our geothermal for 500,000 to 1 million years.
The Geothermal Working Group’s interim report to the Hawai‘i State Legislature was the headline article in the Hawaii Tribune-Herald a couple days ago.
The report warns that world oil supplies are declining, and that we are dangerously vulnerable living where we do in the middle of the ocean; and also that we do have a solution very few people in the world have: Geothermal.
Jeff Rubin is former chief economist for CIBC World Bank-Canada. An optimist, he writes:
Posted by Jeff Rubin on January 19th, 2011
With oil prices within spitting distance of triple-digit levels (Brent traded over $99 per barrel last week, while West Texas Intermediate was north of $90 per barrel), it may be time to reconsider just how long this recovery will run….Read more
Tell me, why NOT geothermal? Why wouldn’t we use geothermal? What am I missing?
Get thousand reasons why no can. I’m only looking for one reason why CAN!
