Category Archives: Peak Oil

Peak Oil, Renewable Energy Sources

The EROI for Geothermal

Here is another good take on EROI (Energy Return On Energy Invested). This video is very interesting and enlightening.

EROI equals the energy it takes to get that energy. That net energy that results, less the energy it takes to produce food, equals our lifestyle.

I wrote the other day that in the 1930s, the EROI (the amount of oil it took to extract more oil) was 100 to 1; it took one barrel of oil to get 100 barrels. A few years ago it was 10-15 to 1. This number is steadily declining because oil is increasingly becoming more difficult to obtain.

When it gets to 1 to 1 there is no sense in continuing. Some folks estimate that in 30 years, most exporting countries will no longer be exporting oil. Maybe we should plan now for the worse.

We don’t need to be engineers to know that the EROI for geothermal is high and that it will stay high. And it will be stable for as long as we can possibly imagine. The odds are much better that oil will become unaffordable much sooner (in less than 30 years) than lava will run over the geothermal wells.

We have an obligation to move toward geothermal now. What will our grandkids and their kids think of us if we don’t?

It is in the best interest of the stockholder that the utility switch to geothermal, too. As all types of oil prices rise, there will be a point of no return when individual alternate energy will be cheaper than oil. When that happens, the electric company’s customers will leave in droves. And they might not have the capital to recover.

The utility customers need a stabilizing force for electricity generation. So it is in the best interest of all of us that the utility protects us from high oil prices.

Food Security, Peak Oil, Renewable Energy Sources, Sustainability

Changing World, Changing Farm

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When I used to go visit Uncle Sonny at Maku‘u, I was just starting to farm bananas. My goal was to capture a sizeable amount of market share. I was thinking hundreds of acres, while Uncle Sonny was farming just a few acres.

It was very interesting for me to see how he produced his exceptional-quality watermelons, which were consistently sweet. It took tender loving care, very close observation, quick appropriate reaction and good old common sense.

Although Uncle Sonny had a fresh water spring on his property, and 10 acres of deep soil, he chose to operate with the bare minimum of inputs. Instead of setting up an irrigation infrastructure around a water pump, he decided that if there was a drought he’d haul water for irrigation. I couldn’t disagree; after all, he was sending money back to the Philippines every month to support a family there. Operating at that scale worked for him.

If a farmer makes money, a farmer will farm. Uncle Sonny farmed at the scale appropriate for him and it worked.

His yard was immaculate. He kept it mowed a good distance down the beach. It wasn’t only work for him; a large part of it was quality of life.

What I took away from visiting Uncle Sonny was a keen respect for small farmers. It is not about the size of your farm—it’s about quality and performance. Uncle Sonny helped me develop a good eye for that.

Our farm, Kea‘au Bananas, went on to become the largest banana farm in the state at 300 acres. About 15 years ago, we moved to Pepe‘ekeo in order to diversify geographically and also to protect against a banana virus. To diversify our production, we transitioned into hydroponic farming.

It was because of water resources that we chose Pepe‘ekeo. There are three springs and three streams at our Pepe‘ekeo farm. We have so much water that we’re now developing a 100KW hydroelectric system.

In order to refocus our marketing, we changed our name and became Hamakua Springs Country Farms. We supply Chef Alan Wong with various hydroponic products. As a result, the Hamakua Springs brand has become known for its good-quality hydroponic vegetables.

In the last five years we have been noticing an escalation in farm input cost while at the same time there has been a squeeze on customers’ discretionary income. We anticipate a future of steadily declining oil supplies; consequently, input costs will escalate and discretionary income will further decline.

Last summer, when oil hit $147, I was convinced that the world had changed forever. Business as usual was not going to work in this new world. How would we adapt? How could we change and still produce significant tonnage to feed Hawai‘i’s people?

I kept asking myself – how could we put the skills and resources of the small farmer together with the resources we have, so that the whole becomes more than the sum of its parts? And in such a way that this organization will be relevant for the future? And could we make this fun, as well as productive?

(To be continued. Coming soon: “The Family of Farms.”)

Peak Oil, Renewable Energy Sources

How To Boil A Frog

Go to the How to Boil A Frog website and click on EROI.

“EROI” equals “Energy Return on Invested.” It means: how much energy one obtains from getting that energy. It’s a very important concept.

In the 1930s, the EROI for oil was around 100 to 1. Today, it’s around 15 to 1 and declining. When it’s down to only 1 to 1, there’s no sense going any further.

But geothermal is a resource available to us here on the Big Island, and one we know will last a very long time. Longer than oil, for sure.

It’s not rocket science!

Peak Oil

Peak Oil Conference Coming Up

The ASPO 2009 International Peak Oil Conference will take place in Denver from October 11 through 13th. This year the conference title is “System Reset: Global Energy and the New Economy.” Registration information is here; I’ll be attending.

I attended the conference two years ago when it was in Houston, and I was the only person from Hawai‘i to attend. It was getting cold in parts of the nation then, and I did not have the heart to tell some of the folks I met that I was going back to Hilo where I would wear shorts right through the winter. Or that our crops grow all year round.

I could not bring myself to tell people there that we had an abundant source of geothermal energy, but that we do not move seriously to harness its potential. Had I told them, I think I might have been ostracized.

It’s why I am in favor of the Thirty Meter Telescope, geothermal production and Hilo’s E Malama ‘Aina Festival. As soon as I returned from that trip, I began to do things to transform our farm and to help all of us transition.

From the website:

It’s been a tumultuous year for the price of oil and the worldwide economy in general. While the signature issue of oil depletion has faded from the headlines, and demand dropped due to economic malaise, the bottom line remains unchanged: our world may be at, or very close to, peak oil production. What are the next steps for the industry and for peak oil advocates?

“Peak oil on a worldwide basis seems to have taken place in early 2008…reaching peak oil still represents a transformative moment in the history of the oil market…it is only a matter of time before prices begin to reflect the reality that oil scarcity may become a fact of life in the not-too-distant future.” – Raymond James investment report, 5/4/09    

Marshalling the expertise of key financial analysts, international oil industry executives, and peak oil observers, the 5th annual ASPO-USA 2009 International Peak Oil Conference presents three days of information-packed events plus a Saturday pre-event workshop designed to stimulate discussion amongst a wide audience of people in business, public policy, and anyone concerned with resource supply issues.

Kevin Phillips, conservative commentator and author of Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism, and American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century, will kick off an extended and continuing discussion of the economic consequences of constrained world oil supplies with his keynote address. ASPO will also feature an extensive roster of presenters, including economists and financial analysts, agricultural and water experts, editors and journalists, contributors to The Oil Drum, and advocates for peak oil mitigation strategies such as energy efficiency, renewable energy, and population control.

ASPO-USA invites your attendance and participation in our signature event!

Biofuel, Food Security, Peak Oil, Renewable Energy Sources, Sustainability

The State of the Future

Two reports of note appeared recently.

The first is the 2009 State of the Future.

This is the stark warning from the biggest single report to look at the future of the planet – obtained by The Independent on Sunday ahead of its official publication next month.

Backed by a diverse range of leading organisations such as Unesco, the World Bank, the US army and the Rockefeller Foundation, the 2009 State of the Future report runs to 6,700 pages and draws on contributions from 2,700 experts around the globe. Its findings are described by Ban Ki-moon, Secretary-General of the UN, as providing “invaluable insights into the future for the United Nations, its member states, and civil society.”

…Jerome Glenn, director of the Millennium Project and one of the report’s authors, said: “There are answers to our global challenges, but decisions are still not being made on the scale necessary to address them. Three great transitions would help both the world economy and its natural environment – to shift as much as possible from freshwater agriculture to saltwater agriculture; produce healthier meat without the need to grow animals; and replace gasoline cars with electric cars.”

This is very interesting for us here, trying to live sustainable lives out in the middle of the Pacific Ocean. The idea about shifting to salt water agriculture has to do with limited amounts of fresh water worldwide. In Hawai‘i, we have the option of doing both.

The second idea, about producing meat without having to raise animals, is driven by anticipated grain shortages worldwide. In Hawai‘i, we can use the sun’s energy to grow grass for feed to make protein. That reduces our dependence on imported feed grains.

And the third idea has to do with decreasing fossil fuel energy and transitioning to electricity. On the Big Island, we have the opportunity to bring geothermal on line as base power so we can utilize maximum amounts of renewable energy.

The sooner we get away from thinking that we must depend on liquid fuel for transportation, the better.

The second article I found of interest, written by Lester Brown, was in the May issue of Scientific American. Brown founded the World Watch Institute, and headed that organization for many years. It was an article in the World Watch Magazine many years ago that led us (Kea‘au Banana) to become the first banana farm in the world certified by the Rainforest Alliance as ECO O.K.

In this article, Brown points out that the rise in grain prices is now trend-driven. For example, Saudi Arabia just announced that it will be decreasing its grain production by 1/8 each year. This is because they would use up the water in the non-rechargeable aquifer. So they are leasing land in other countries to grow grain for their population. Similarly, 120 million Chinese and 165 million of India’s population depend on grain growing on non-recharge aquifers. Many countries are making deals to protect their populations right now.

Those countries with rapidly rising middle classes want to eat higher on the food chain, putting further pressure on grain prices. People just cannot wait to jump in a car and drive to McDonalds.

If global warming detrimentally affects China’s mountain glaciers, which provide water for summer crop production, it is likely China will go on the open market and compete with the U.S. for its own grain supply. Knowing that is possible, we need to see about growing our own cattle and fish food. Fortunately, we can.

The prospect of peaking oil production has direct consequences for world food security, as modern agriculture depends heavily upon the use of fossil fuels. Most tractors use gasoline or diesel fuel. Irrigation pumps use diesel fuel, natural gas, or coal-fired electricity. Fertilizer production is also energy-intensive. Natural gas is used to synthesize the basic ammonia building block in nitrogen fertilizers. The mining, manufacture, and international transport of phosphates and potash all depend on oil.

But surprisingly, the most energy-intensive segment of the food chain is the kitchen. Much more energy is used to refrigerate and prepare food in the home than is used to produce it in the first place. The big energy user in the food system is the kitchen refrigerator, not the farm tractor. While oil dominates the production end of the food system, electricity dominates the consumption end.

In Hawai‘i, farmers need to get out from under the dominance of oil in the production end of agriculture. The grass fed beef cattle industry is doing just that. Avoidance of petroleum-based packaging wherever possible helps, too.

Legislation and incentives that help farmers move toward renewable energy sources are very helpful. It is very important that Ag and energy policies be coordinated. We need to address questions like: “Should we plant trees for transportation fuel, instead of grass for cattle feed?” We need a detailed analysis of the consequences. We know for sure that grass equals beef at any scale. At what scale will trees make biofuels?

How about someone figure out how to convert internal combustion engine farm tractors to ones that are battery driven? Can our Community College folks do that? Can we make our own nitrogen fertilizer from renewable sources? How about it, U.H. Engineering School?

The 2009 State of the Future report suggests: “Replace gasoline cars with electric cars.” Absolutely, and use our geothermal resource to produce that electricity.

We on the Big Island have exciting opportunities ahead of us if we just focus on the future. Not, no can. CAN!

Peak Oil

Peak Oil Review

Oil demand has not yet started to rise. Every possible place there is to store oil is being used, and the world oil supply is relatively steady right now.

Yet oil prices are rising with the stock market, on hopes that the world economy will start to become stronger.

If this keeps up, rising oil prices could potentially kill any serious economic recovery. And then the cycle will repeat itself.

To get good information on world oil supply issues, subscribe to the weekly Peak Oil Review.

The June 2, 2009 Peak Oil Review starts like this:

1. Production and Prices
Oil prices surged to a six-month high above $66 a barrel last week, despite protests from most observers that fundamentals of supply and demand did not support such a move. A combination of  factors was behind the sudden rise. Most important was the fall of the US dollar to a recent low of $1.41 against the Euro, sending traders into commodities for protection. An unexpectedly large drop  in the US crude inventory of 5.4 million barrels and statements by the Saudi Oil minister that  demand for oil from Asia was picking up contributed to the increase.  Other drivers behind the move were an increase in consumer confidence in the US; a 5.8 percent  growth in India’s GDP in the first quarter; a 5.2 percent increase in Japan’s industrial production; and  a statement from OPEC’s Secretary General that oil prices may reach $70 to $75 by the end of the year.

Read the rest here.

Mauna Kea, Peak Oil, Renewable Energy Sources

Part 3: We Have Two Good Options

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In Part 1 and Part 2 of this article, we talked about how in just one generation, the U.S. middle class increasingly came under financial pressure. And we talked about how our whole complex economy is now resting on the stressed-out middle class.

We are noticing that as the finite oil supply depletes, the world population increases, and that puts more and more pressure on demand. As prices rise beyond what we can stand, our economy will drop back into recession. It’s a scenario that can keep repeating itself.

There are a couple of “big picture” things that are unique to us living here on the Big Island, which we can use to do something about all this.

1) We can support the Thirty-Meter Telescope (TMT). Now that the Comprehensive Management Plan has passed, there are specifics in place to take care of Mauna Kea and so we can proceed with the Thirty-Meter Telescope process.

The TMT is a $1.3 billion construction project. It will take nine years to build and will employ more than 300 people during the construction phase. These jobs will help alleviate pressure on our middle class.

Many people feel that most oil exporting nations will no longer be able to export oil within 10 -20 years. If so, we will be happy to have a resource like the TMT located on the Big Island.

In steady state operation, the TMT’s payroll will exceed $25 million a year — and it will be around for 50 years after construction is finished in nine years or so. These are steady jobs that will not rise and fall with the economic times. This will be increasingly more important as the economy suffers from rising oil prices.  In addition, the TMT folks are willing to dedicate a significant amount of money to the education of our keiki, K-12 and beyond.

In addition, the TMT folks are willing to dedicate a significant amount of money to the education of our keiki, K-12 and beyond.

Having this opportunity to site the best telescope in the world on our island is a unique opportunity that comes only once in a lifetime. For the sake of the future generations here, we need to make it happen.

2. The other opportunity unique to the Big Island is the possibility of increasing use of geothermal energy as a source of generating electrical power. Geothermal energy is very dependable and steady. It’s the most dependable source of renewable energy we have available on the Big Island. Let’s use more of it, now!

Our electrical utility HELCO is tasked with providing us dependable and inexpensive electrical power. They also have an obligation to give their investors a fair rate of return. They have a two-part problem.

Electricity usage decreases with lower economic activity, yet they need more electricity sales to generate income for their investors. How about increasing the use of electric vehicles to increase sales for HELCO? Simultaneously, we can utilize as much geothermal energy as possible to stabilize the cost of electricity and make our electric grid more dependable.

It takes energy to get energy. The energy left over, after we use some to grow our food, gives us our lifestyle. We in Hawaii can look forward to a good lifestyle if we switch to renewable sources for our energy. And geothermal gives us the best opportunity to maximize all the renewable resources we have available to us.

By supporting the TMT and Geothermal Energy here, we could have good jobs, good education and dependable, reasonably priced energy. As we face an uncertain future, this would not be such a bad outcome!

Current Affairs, Peak Oil, Sustainability

“The Coming Collapse of the Middle Class”

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Here is a very interesting video that talks about the incredible changes that have taken place in American in only one generation.

It’s called “The Coming Collapse of the Middle Class: Higher Risks, Lower Rewards, and a Shrinking Safety Net,” and it’s a talk by distinguished law scholar Elizabeth Warren, who teaches contract law, bankruptcy, and commercial law at Harvard Law School.

She is an outspoken critic of America’s credit economy, which she has linked to the continuing rise in bankruptcy among the middle-class.

Her talk covers much more than that, though. [Editor Leslie’s note: I just sat and watched that entire one-hour video, practically without blinking. I didn’t have time to, but it is fascinating and I watched it all the way to the end. I highly recommend it.]

Some of her points: 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.

She also discusses how, compared to the 1970s, hospitals now send people home “quicker and sicker” (their phrase, she says) in order to control costs, and the family is shown how to and expected to care for, say, a post-surgery patient themselves. Which generally requires someone taking time off work.

And there is so much more on that video. It is a real eye-opener.

So today’s middle class is under terrific debt pressure. I think the effect is called a lower marginal propensity to consume. They get too many bills!

How is this related to the economy in general?

Gail Tverberg writes that a multiplicity of debt rests on a small base personal income. She writes: “It looks to me as though we are due for a debt unwind, and with it a rapid decline in the U.S. standard of living. Exactly what form it will take, and what the timing will be (for example, sudden one month from now or sudden three years from now, or gradual over a longer period), isn’t certain. I would expect that many (or most) other economies in the world will be dragged along in this debt unwind and will experience a decline in their standards of living.”

If Elizabeth Warren and Gail Tverberg are right, then it appears that an external shock to personal income would cause a ripple effect throughout the economy. Could this latest shock have been caused by the demand of a growing population pushing up against a finite resource, such as oil?

If so, we are facing an economic future of highs and lows where the lows become increasingly deeper and longer. We cannot afford to wait; we need to pay attention to the basics – food and energy!

We need to plan for the worse and hope for the best. We must utilize every advantage available to us as we transition away from imported energy.

It is not about us anymore – now it is about future generations.

We’ve been hearing that the American consumer is under pressure and that our economic system is a house of cards. Will Peak Oil come to be the straw that broke the camels back? Because of the resources we have available to us, I think that we in Hawai‘i have a very good future if we focus our attention on future generations.

There is a reason I am talking about all this right now. Check back here on Monday and I’ll tell you about Part 2.

Biofuel, Peak Oil, Renewable Energy Sources

Why Not Geothermal? What Am I Missing?

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Why aren’t we looking to export geothermal from the Big Island? The considerable rents and royalties could be used to benefit the most defenseless in our society, while protecting the rest of us from the energy tax of fossil or green biofuels.

Why not geothermal? This question has been on my mind since I came back from the Peak Oil conference in Houston in 2007. Is there something I am missing?

We talk about getting 70 percent of our power from renewable sources by 2030. We talk about laying a cable to Lana‘i to bring wind energy to O‘ahu. We talk about biodiesel as a way to provide fuel for transportation.

But wind energy is unstable and we would need to balance it by using some sort of stable power, so we will still have to rely on diesel generators. Though we talk about no longer depending on fossil fuel generators, we would be relying on biofuels generators to make our electricity.

We even talk about generating our own biofuels. Well, maybe and maybe not. Farming palm nuts or jatropha on a large scale is not practical, and algae and cellulosic fuel generation is not proven. We hope that these technologies will eventually work, but hoping is not a energy policy.

We can import biofuels from Asia and call it renewable and green. But we will still be exporting part of our economy, no matter what color it is.

On the Big Island we have free geothermal energy. It would be a good way to stabilize wind energy.

Why not geothermal? What am I missing?

Community, Food Security, Peak Oil, Renewable Energy Sources, Sustainability

Pacific Century Fellows at the Farm

Yesterday, the 10th class of Pacific Century Fellows visited our farm.

Here’s a little about the Pacific Century Fellows:

The objective of the Pacific Century Fellows Program is to develop leaders with a greater awareness and sensitivity to the people and institutions of Hawaii. Based on the White House Fellows Program, the Pacific Century Fellows Program will bring together annually up to 25 of Hawaii’s most promising individuals from all walks of life, fields and professions. They’ll gain a broader view of civic duty through direct contact with senior community, social and government leaders. The program encourages the development of long-term relationships between leaders young and old, united in their commitment to find creative solutions to the challenges facing the state.

The people in this program are our future leaders; our best and brightest. What message did I want to get across? I decided to talk about the most important issue facing our state: that Hawai‘i imports 90 percent of its food. How will we make sure we can feed ourselves?

I told them that this is not rocket science. “If the farmers make money, farmers will farm.”

Modeled after the White House Fellows Program and founded by Mayor Mufi Hannemann, the Fellows are chosen on the basis of a written application and personal interview conducted by a blue-ribbon panel of judges. Individuals who are chosen have shown strong intellectual and leadership abilities in the early and mid-stages of their careers, and who have the potential to make significant contributions to the community in the future.

The Pacific Century Fellows Program will provide participants with direct contact with senior community, social, and government leaders. A goal of the program is to nurture relationships among individuals who are committed to exploring creative and constructive solutions to far-reaching challenges facing the state and nation.

I told them that we at Hamakua Springs Country Farms plan at least five years out for a future that we need to be relevant within. And that the physical layout they were seeing was planned five years ago, and is not really where we are now.

What is that future that we must be relevant within? I told them that this simple formula makes sense for us and applies to everyone in Hawai‘i: Net energy return on energy invested, minus the energy used for food production, gives us our life style.

Say it takes one barrel of oil to extract 15 barrels of oil, and it takes two barrels of oil to produce food for a certain number of people. Then our group would have 13 barrels of oil to do everything else – like run lights, pump water, drive to Kona, go fishing, etc. We would be living better than kings in years past.

But it is getting more and more difficult to extract oil. Say, one barrel now can only extract 10 barrels, and it still takes two barrels to grow our food.  Now we have only eight barrels instead of 13 to do everything else. This is not rocket science either. It is a simple formula to manipulate.

We need to figure out how we can get the best net energy return on energy invested. And we need to figure out how to lessen our dependence on oil to produce our food.

And other things flow from the principles above:

If done correctly, the Thirty Meter Telescope is a good thing. It can help educate our keiki and help future generations cope.

The E Malama ‘Aina sustainability festival is meant to show people they are not alone as oil prices rise and times start getting challenging.

I am very supportive of geothermal energy use. This is the best source of renewable energy we have here in Hawai‘i. It is a great gift.

Plug it into our formula above and we end up with a better lifestyle. In fact we have so many sources of renewable energy, we can have a relatively better lifestyle than the U.S. mainland.

The reason we pushed the alternate energy loan program through the last legislature is because “if the farmer makes money, the farmer will farm.”

It’s why we support an extra incentive for farmers to develop alternative energy projects.

It’s also why we support a discount for produce transported on Young Brothers’ barges.

We must not lose our focus. We need closer communities – we need to make more friends and we need to be closer to our families. We need to help each other as we face tougher times ahead.

Hawaiians knew how to do this.  It is called the Aloha Spirit. And it works best when everyone practices it.

I think President Elect Obama, who grew up here in Hawai‘i, carries the influence of the Aloha Spirit with him, and that is what is making this country hopeful.