Category Archives: Peak Oil

Food Security, Geothermal, Peak Oil

How Geothermal = Food Security

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Our “food security” is about farmers here in Hawai‘i farming. We know that Hawai‘i imports more than 80 percent of its food, and has only a seven-day supply of food on island at any one time.

Being more food secure means growing much more of our food here. How do we make that happen?

If farmers make money, the farmers will farm.

The cost of electricity cost is directly related to farmers farming or not. Farmers are price takers, not price makers. So as electricity costs go up for consumers, wholesalers and retailers, farmers’ prices necessarily go down and so do their profits.

We all know that world oil supplies will be declining and that petroleum prices are likely to be very high in the next few years, making fossil fuel-produced electricity rise very high in price.

Do you know what the most energy-intensive part is regarding getting our food? Surprisingly, it’s not the “on farm” energy usage. It’s the energy needed for the stop-and-go transportation of getting food to your home,  the cost of refrigeration during that journey and the cost to refrigerate your food once it’s at your home.

So what will help with food security?  Cheap electricity. On the Big Island, that means geothermal electricity.

Produced locally, it is the cheapest form of electricity here. For more than 15 years it has operated without subsidies, and it even earns money for the state of Hawai‘i—currently more than $3 million a year.

Cheap electricity will lower wholesaler and retailer operating costs and therefore leave more discretionary income in the pockets of consumers, and they will be able to buy local produce. It will result in less pressure on farmers to lower their prices beyond what is reasonable, and they will make decent livings and continue to farm. And we will have increased food security out here in the middle of the ocean.

If farmers make money, the farmers will farm!

Community, Peak Oil

Hawaiian Common(s) Sense

I was interested in this energybulletin.net article.

Elinor Ostrom Wins Nobel for Common(s) Sense
by Fran Korten

Fran: Many people associate “the commons” with Garrett Hardin’s famous essay, “The Tragedy of the Commons.” He says that if, for example, you have a pasture that everyone in a village has access to, then each person will put as many cows on that land as he can to maximize his own benefit, and pretty soon the pasture will be overgrazed and become worthless. What’s the difference between your perspective and Hardin’s?

Elinor: Well, I don’t see the human as hopeless. There’s a general tendency to presume people just act for short-term profit. But anyone who knows about small-town businesses and how people in a community relate to one another realizes that many of those decisions are not just for profit and that humans do try to organize and solve problems.
If you are in a fishery or have a pasture and you know your family’s long-term benefit is that you don’t destroy it, and if you can talk with the other people who use that resource, then you may well figure out rules that fit that local setting and organize to enforce them…. Read more

This is the Hawaiian way, and it’s the way we are trying to go. Common(s) sense is appropriate.

The world has changed in the face of Peak Oil. So that we will be relevant years from now, we are changing. I am turning our farm, Hamakua Springs Country Farms at Pepe‘ekeo, and the resources available to us – people, water, land and hydro power – into a commons of sorts.

We are bringing more and more farmers to work together with us for the common good.

Peak Oil

Peak Oil’s Real Symptoms

Peakoil

 

 

 

 

 

 

 

 

Gail Tverberg, who I’ve written about here before, has a good article at www.ngoilgas.com about “the real symptoms of Peak Oil.” It starts like this:

Most people expect high prices to be an indication of “Peak Oil”, but are we missing the real symptoms?
 Our resident expert and one of the editors of The Oil Drum, Gail Tverberg takes a look at what she believes to be the more important symptoms of the arrival of peak oil.

If I were to ask 10 random people what they would expect to be a sign of the arrival of “Peak Oil,” I would expect all 10 to say “high oil prices.”

Let me tell you what I think the symptoms of the arrival of peak oil are:

1. Higher default rates on loans

2. Recession

Furthermore, I expect that as the supply of oil declines over time, these symptoms will get worse and worse – even though people may call the cause of the decline in oil use “Peak Demand” rather than “Peak Supply.”

Let’s think about what happens when oil prices try to increase. From the perspective of a consumer who is already spending pretty much all of his income, it seems to me the result is something like this…

Read more

Geothermal, Peak Oil

Why We Need Geothermal

Geothermal is the cheapest of the “base power” alternatives, and we must choose the cheapest alternative first. It’s the people on the lowest rungs of the economic ladder who will have their lights turned off first. We must take care of the most defenseless among us. If they are safe, we are all safe.

Geothermal is also the only alternative that is a resource for the native Hawaiian community.

Why we need geothermal:

One of the most important, yet mostly unnoticed, things happening in the field of energy is that production in world oil fields is declining due to natural causes. Every year we have 4 million fewer barrels of oil than we had the year before, and this needs to be made up by new discoveries.

Saudi Arabia produces approximately 10 million barrels of oil annually. That means that in order to keep the status quo, we need to find the equivalent of another Saudi Arabia every 2-½ years. This is very unlikely.

Here in Hawai‘i, we don’t have time to waste – we must implement economically feasible, proven technology wherever possible. We must do the right things for our future generations.

The technologies:

Because of their sporadic natures, both solar and wind are not likely to supply more than 15 percent of the electric utilities’ total needs.

What about biofuels? Where can they fit? Most are not economically feasible at this time. And its Energy Return on Energy Invested is very low—less than 2 to 1. Robert Rapier, a very well-respected expert in the field, has doubts about much of its technology. I agree with his assessment.

Some say we are discovering more than enough oil, pointing to Iraq as a potential supplier of 12 million barrels per day, if everything goes according to schedule. This, though, would merely delay the “peak” by three years.

What about the Canadian tar sands? They are producing only 300,000 barrels per day now. Even if that doubled, it would be relatively insignificant.

How about the deep ocean off Brazil? If it hits full production in six years – well, oil will have declined by 24 million barrels per day by then. It is unlikely that field will have twice the production of Saudi Arabia.

Because our current economic recession has caused demand to decrease, we have not been paying much attention to oil supplies and this is why we don’t notice too much that’s unusual. But more and more people are starting to notice the seriousness of the situation and they are starting to speak up.

Several very well-respected people in the world oil industry express their concern in this short video clip. They are: Jeremy Gilbert, former chief petroleum engineer for British Petroleum; Sadad al-Husseini, former VP of Production and Exploration Saudi Aramco; and Chris Skebrowski, Editor, Petroleum Review and Principal, Peak Oil Consulting. They all say we have a very serious oil supply problem.

Jeff Rubin is the former Chief Economist of CIBC World Markets and the author of Why Your World Is About To Get A Whole Lot Smaller. He built his reputation as one of Canada’s top economists based on a number of successful predictions, including the housing bust of the early ‘90s and the rise in oil prices.

In his recent book, Mr. Rubin predicts $225 per barrel oil by 2012 and with it, the end of globalization, a movement towards local sourcing, and a need for massive scaling up of energy efficiency. In this video, Jeff Rubin explains lots of things one would not normally know. There is also a written transcription of the video, if you’d rather read it. Here’s how it starts:

You know, the world’s not running out of oil. There’s all kinds of oil left in all kinds of places. There’s 165 billion barrels of the stuff in the Alberta tar sands. And if we run out of that, there’s tar sands in the Orinoco. And there’s oil 5 to 10 miles below the ocean floor, in the Gulf of Mexico, off the coast of Brazil. And if we run out of that, there’s oil in shales, in places like Wyoming and Colorado. So it’s not about running out of oil. We’re never going to run out of oil.

But what the world is going to run out of, indeed, what the world has already ran out of, is the oil that you can afford to burn. Not just burn in your cars, and 60 percent of all the oil that we consume is consumed in the form of either gasoline or diesel fuel to power those cars. But maybe, more fundamentally, the ways that we burn oil in a million different degrees to which we’re not aware of. But most fundamentally, the way we burn oil to run a global economy. And by a global economy, I mean where we produce something at one end of the world, ostensibly to take advantage of cheap labor costs, to be sold at the other end of the world.

Because, while that model of the economy is based on wage arbitrage, it assumes, implicitly and critically, that the cost of moving goods and parts around the world is trivial or marginal at best. But no matter how we move goods around the world, whether we move them by air, whether we move them by boat, whether we move them by rail, or by truck, we are burning oil. And soon, we will no longer be able to do that…. (read more)

Geothermal is proven technology. It’s also the lowest cost “base power” source, meaning it will put more discretionary income into the hands of consumers. Businesses will flourish and people will have jobs to raise their families.

As a bonus, “off peak” geothermal power can be used to make ammonia, which can be used as a source of nitrogen fertilizer. It can also be used as a transportation fuel for gas and diesel engines, and can be moved and stored with the same infrastructure as propane.

Remember: geothermal is the cheapest answer, and it is the least well-off among us whose electricity will be shut off first when prices skyrocket beyond what we can now imagine.

Geothermal, Peak Oil, Renewable Energy Sources, Sustainability

Listen To Richard on KIPO-FM Monday 2/1/10

Next Monday’s Energy Futures program on Hawaii Public Radio will focus on sustainable agriculture and its relationship to energy efficiency. Guests will be Richard Ha, president of Hamakua Springs Country Farms located on the slopes of Mauna Kea on the Big Island, and Jerome Renick of the Integrated Agriculture Network, also on the Big Island’s Hamakua Coast.

Energy Futures is broadcast live on Mondays 5-6 pm HST on KIPO-FM (89.3 in Hawaii) and is streamed on the Internet. An archive file of each week’s show is usually posted sometime on Tuesday at the Hawaii Public Radio website.

To listen to this program over the Internet via live streaming audio, click on your player (Windows Media, Real Media or iTunes).

We will be talking on the radio about ag and energy, both subjects that are dear to my heart. Here are some of the things I want to discuss.

Agriculture

For two years now, I have been the only person from Hawai‘i, where we are heavily dependent upon oil for our transportation and for the generation of our electricity, to attend the Peak Oil conference (in Houston 10/07 and Denver 10/09).

The world is not running out of oil – it’s running out of cheap oil. I believe that, in close consultation with the Hawaiian community, we should consider using geothermal for most of the Big Island’s electrical base power needs.

Geothermal breaks even at the equivalent of $57 per barrel oil and will stay steady for centuries. Fossil fuel oil prices will keep on rising, and bio fuels are even more expensive than fossil fuel oil.

We need to choose the alternative that is cheapest and that will not rise in cost, and that is geothermal.

We are busy reorganizing our farm so it will be relevant as oil and gas prices keep on rising. Last summer, when gas prices spiked, some of my workers asked to borrow money to pay for gas to come to work. Clearly, this is not sustainable.

We don’t think that importing foreign labor is sustainable, either. So we are reorganizing into units of small family farms. We call it the “family of farms.” The idea is to utilize our large-scale economy to the benefit of smaller, family-sized units.

For example, we have a local farmer growing all the Japanese cucumbers we used to grow. We provide free water and cooling and they do the farming. We hope to replicate this many times. The result is that all the family farmers will come from the immediate neighborhood, and this way we are not pressured to find workers, nor to provide labor housing.

Energy

I’m big on using Energy Return on Investment (EROI) as another tool to evaluate energy resources.  In the 1930s, to generate 100 barrels of oil took the energy equivalent of 1 barrel. In the 1970s that had declined to approximately 30 to 1, and now it is around 10 to 1. Clearly this trend is not good.

Folks who study these things, Professor Charles Hall in the forefront, estimate that an EROI of 3 to 1 is the minimum for a society to be sustainable. Biofuels, which are often discussed as the solution to the oil problem, have an EROI of <2 to 1.

On the other hand, geothermal has an EROI of 10 to 1 and it will be that way for centuries.

Plus, geothermal is the cheapest form of base power. And because the State owns the mineral rights to geothermal, it is a resource for the Hawaiian people: 20 percent of proceeds from geothermal goes to the Office of Hawaiian Affairs.

In addition, from the “off-peak” stranded power that geothermal provides, we can make ammonia, which can be used as a transportation fuel as well as a fertilizer source.

There’s a lot to like about geothermal.

Peak Oil

Gail Tverberg & Peak Oil

Gail Tverberg wrote this article for Oil and Gas magazine:

It seems to me that the current recession is very much energy-related, and is likely to continue. The recession is occurring because the current US “system” (individual homes, private cars, many imports) was built for cheap ($20 barrel) oil and gas, and cannot function well using expensive oil and gas.

She notes that people’s income are relatively fixed and any increase in energy costs is not good for the economy. This means that expensive energy will hurt us, while cheaper energy will help us. If people no more money, they cannot go to the stores.

Geothermal gives us a way out.

When energy matters came to my attention several years ago, Gail’s writings stood out. They are clear, simple and easy to understand. Gail has a mathematical background. She worked as an actuary, advising the insurance industry on risk and reward matters.

Later, I found out that most Peak Oil staffers are international and nationally recognized experts in the oil and gas industry, or experts in other relevant fields. They know what they are talking about. I respect simple competency.

When I went to the first Association for the Study of Peak Oil conference in October 2007, in Houston, I made sure to go up and introduce myself to Gail.

As soon as I came back, I suggested to Betsy Cole of the Kohala Center that they do an energy conference. It took place in June 2007 at the Hilo Hawaiian, and Gail was the featured speaker.

After the conference I spent three days taking Gail and her family sightseeing. Peak Oil was on both of our minds and we spent quite a bit of the time talking about the ramifications.

Although masked by the present recession, the same forces of declining oil supplies are still at work two and a half years later. Many folks from Hawai‘i responded to her post on the Big Island. It is true that we are very much aware of what is going on.

Back then I called Kale Gumapac, alaka‘i of the Kanaka Council, and told him that I could arrange for the Kanaka Council to hear Gail’s talk free of charge. He told me that his people would feel awkward among the “shiny shoe” crowd*.

So instead I made arrangements for Gail to see them at the Lili‘uokalani Children’s Center. Though the Kanaka Council members were at an important County Council hearing, they all went over to hear Gail speak.

It was remarkable how Gail’s message resonated. For them, it was not a matter of “if the boat not going come.” It was a matter of when.

During the talk and after, they  treated Gail as a kupuna. It was remarkable to see.

* This is where the phrase “rubbah slippah crowd” came from.

Biofuel, Geothermal, Peak Oil

More Thoughts on Peak Oil – And Our Solution

I thought that I would revisit a post I did on my first impressions of the Peak Oil conference in Denver this past October. I have added comments to the post I did back then. My new comments are in italics.

Examining Energy Alternatives

I learned something interesting at the Peak Oil Conference I’m currently attending in Denver. It’s about a pattern. When U.S. oil costs exceed four percent of the gross domestic product – so, when the price of oil hits $80 per barrel – we go into recession. (Note that this does not mean oil prices won’t go even higher than $80 per barrel.)

I think that investors are very reluctant to bet against the pattern above. They know that at some point above 4 percent GDP, they will be playing with fire. Last July’s oil price of $147 and the immediate collapse is fresh in their memories as something that can happen. So we watch as the stock market and oil prices twist themselves into a pretzel, according to the strength of the U.S. dollar, the strength of the Chinese economy, the cold winter, the status of Iraq, the riots in Iran, and on and on.

We should be paying attention to the actual supply situation. The natural decline rate of the oil supply is between 5 and 6 percent. That means we need to find 4.5 million gallons per day of new oil supplies — every year — or we are going to be short.

Right now, we have more than enough oil. But Jeff Rubin, former chief economist of CIBC, predicts $225 per barrel oil by 2012 and with it the end of globalization, a movement towards local sourcing and a need for massive scaling up of energy efficiency.

We need to move to geothermal now, not thirty years from now.

David Murphy talked about Energy Return on Investment (EROI), and I asked him what he thought the EROI is for geothermal. He said around 10 to 1, and he agreed with me that it is an attractive alternative energy to pursue for Hawai‘i. This was the consensus of everyone I asked about geothermal. Because geothermal costs are stable, it’s a no-brainer.

Terry Backer, a panel member and long-time Connecticut legislator, pointed out how he sees the economy unwinding. He said that people in his state had been doing okay. In early 2007, although things were tight, people had around a $400-500 per month cushion. But then the price of heating oil was high in the winter, and then the price of gas went to $4.50 per gallon, and food prices went up too. It just stripped people of their “cushion.”

If the consumers have no extra money they cannot buy things. Elizabeth Warren gave this speech that says it all. (Coincidentally her base year is 1970, the year that oil peaked in the U.S.).

The question is, how do we give the middle class disposable income? Choosing the low cost alternative to fossil fuel can help. We have geothermal, which is this.

It’s exactly why we need to move to geothermal. It will stabilize costs, and protect folks forever from ever-higher electricity and water bills that result from rising oil prices.

We need to force that change, not give a thousand reasons why “no can.” Sure we can try other alternatives. But as farmers always say: “What works, works.” Geothermal works.

We must be careful not to end up like Iceland. Fishing and geothermal worked. But instead they started chasing after finance matters, whose foundation rested on sand. Their economy collapsed and now they are left with fishing and geothermal—the things that still work.

And when people start buying electric vehicles, this will protect them from gasoline costs, too. As for businesses, their customers will have more discretionary income to spend. The government will see fewer folks fall through the cracks.

We probably are going to be dependent on gasoline for transportation for a long time. One practical way for Hawai‘i people to protect themselves from high gasoline costs is to buy hybrid vehicles. In Japan, hybrids are a hit. On the Big Island, the more “base power” that comes from geothermal, the more discretionary income people will have. The more discretionary income people have, the more business prospers and the more jobs are available for people who are raising their families.

In the final analysis it is about the consumers. Consumers drive the economy. We tend to forget that.

For native Hawaiians, the use of the geothermal resource will generate revenues in royalties and possibly rents as well. They are consumers, too.

Biofuels, on the other hand, are not expected to be cheaper than oil, and may even need subsidies from consumers. Why would we do that, when we can instead save consumers money by using geothermal?

By now, everyone must be aware that biofuels are wishing and hoping. We wish it would work. Farmers know that it will be very expensive and that it will take money away from consumers.

We need to put in a cable to O‘ahu. They need base/dispatchable power over there, on top of which they can put solar and wind. Without that, O‘ahu will be hopelessly dependent on oil.

All that is true. But we need to take care of the people on the Big Island before we even consider another option. That point was made abundantly clear at a presentation on geothermal I did for the Keaukaha Community Association.  Done right, with community input and community benefit, I’m confident that the people would look favorably on sending power to O‘ahu. But it is a Big Island discussion.

As a farmer, I am concerned about where we are going to get the fertilizer to feed ourselves. Nitrogen, the building block of protein, is extracted from air using high heat and pressure. Oil and gas are what is used now, and that process takes lots of power. But if oil and gas prices rise enough, geothermal power can be substituted. We need to place ourselves in a position to win.

Again, geothermal would generate a lot of royalty money for the Hawaiian people. Without this revenue source, we will see more and more cuts to social services.

I am very encouraged to see that Hawaiians are leading this discussion. This is the right thing to happen.

Geothermal can be a blessing for the Hawaiian people.

If we can maximize its use as a resource for the native Hawaiian people, we will also strengthen our middle class. If we do that our businesses will flourish, everybody will benefit and our future will be hopeful

Geothermal, Peak Oil, Renewable Energy Sources

The Geothermal Fork In The Road

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This paper has most influenced my thinking about our energy future. I noted that in the 1930s, one could get 100 barrels of oil from the energy in one barrel of oil. By the 1970s, that had declined to 30 to 1 and now it is around 10 to 1.

An excerpt from that paper:

What is the Minimum EROI that a Sustainable Society Must Have?

Charles A. S. Hall *, Stephen Balogh and David J. R. Murphy
Program in Environmental Science, State University of New York – College of Environmental Science and Forestry, Syracuse NY, 13210, USA

Energy surplus is defined broadly as the amount of energy left over after the costs of obtaining the energy have been accounted for. The energy literature is quite rich with papers and books that emphasize the importance of energy surplus as a necessary criteria for allowing for the survival and growth of many species including humans, as well as human endeavors, including the development of science, art, culture and indeed civilization itself. Most of us who have thought about this issue deeply would even say that energy surplus is the best general way to think about how different societies evolved over time.

The trend is unmistakeable, and it’s what made me realize how important geothermal is to our sustainable future.

Geothermal has an Energy Return on Investment (EROI) of 10 to 1 and unlike fossil fuels, which will steadily decline, that won’t change for centuries. Very few people in the world are lucky enough to have this option.

When coming to the fork in the road where one choice is geothermal, the survivor types – the rubbah slippah folks – will naturally take the geothermal turn.

If we were to take the other fork, our electricity and water costs would rise and rise until there was no more. People would start to leave the electric grid. Our schools would not be able to afford the electric rates, and they would have to turn off the air conditioning and the kids would have a hard time learning. The poorest among us would have their electricity and water tuned off.

Down the geothermal road, however, the grass is always green. Our electricity and water costs will stay the same as they are today – for centuries. After awhile, our everyday living costs would be cheaper than those on the mainland.

Because our low income folks would have extra money, our businesses would start to grow. And as our electricity costs became lower relative to the U.S. mainland, we would be more competitive in manufacturing and things that use energy. Most of us would be cruising around in hybrid electric cars.

It’s perfectly clear that we need to go down the geothermal road. My Pop used to say: “Get thousand reasons why no can; I only looking for one reason why can!”

Here is the Puna Geothermal Ventures website. The company is run by local folks and its manager is Mike Kaleikini. They are good community citizens.

Government, Peak Oil

Did Middle Class Decline Because Of Peak Oil?

The business section of yesterday’s Honolulu Advertiser had an article called TARP panel’s chief could lead new consumer agency.

It’s about Elizabeth Warren, a Harvard University law professor who is head of the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP).

I once wrote here about Warren’s speech “The coming collapse of the middle class.” (That video of her speech is very interesting and well worth watching. She is one of my heroes).

When I first heard it, I thought: How coincidental that the U.S. hit its peak oil production in 1970, the same time period she used as an example of when the American middle class was strong. In 1970, the Energy Return on Investment was 30 barrels return from one barrel of energy used to obtain it. Today that ratio is 10 to 1 or so.

Could the decline in our middle class be related to our decrease in net energy? Could it be that technology is not beating the decline in net energy? And we have to make up for it by working twice as hard? Just asking.

Some of Elizabeth Warren’s points, from our previous post:

In the 1970s, a married couple with two kids had one parent in the workforce and saved 11 percent of their income. To get into the middle class, their kids needed to get a high school diploma and to be willing to work hard. That 12 years of education that their children needed, to get into the middle class, was free.

Warren says that the most important thing that happened in the first two-thirds of the 20th century was that women entered the work force.

In the 2000’s, a similar married couple with two kids must have two people in the work force – because, she says using numbers adjusted for inflation, median mortgage payments in 2005 are 76 percent higher than they were in 1970. Health insurance – in a healthy family with employee-sponsored health insurance – costs the family 74 percent more. Childcare costs have increased 100 percent, and as compared to the 1970s family a 2000s family has the expense of a second car because of that second person in the workforce, and because of that second income their tax rate is up by 25 percent.

In comparable dollars, the 2005 family is actually spending much less on clothes, food, appliances and cars than the 1970s family did; it’s the non-flexible, big ticket and important expenses that have increased so dramatically and that require that second income.

So a comparable married couple with two kids in 2005 has no savings (compared to the 1970s couple, who saved 11 percent of their earnings), and 15 percent of their income is in credit card debt as they try to keep up.

To launch their kids into the middle class requires 16 years of schooling, and the 2005 family has to pay  for the first two years (preschool) and the last four years (college) themselves.