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.)

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 concensus 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.”

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.

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.

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?

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.

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.

Geothermal can be a blessing for the Hawaiian people.

I am in Denver right now for the Peak Oil conference. It’s the same Association for the Study of Peak Oiland Gas conference I  attended two years ago in Houston. That was the one that convinced me that the amount of oil the world uses is such that oil production won’t be able to keep up. And that means oil prices will keep rising.

This video The Crash Course By Chris Martenson explains the basics of Peak Oil very nicely and I recommend it. It’s all common sense. From the introduction:

Energy is the lifeblood of any economy. But when an economy is based on an exponential debt-based money system that is itself based on exponentially increasing energy supplies, the supply of that energy deserves our very highest attention.

Oil is a miracle, working tirelessly in the background to make our lives easy beyond historical measure. Oil represents over 50% of US total yearly energy use, while oil and natural gas together represent over 75%. How easily could we replace the role of oil in our style of consumer-led, growth based economy? Not very.

Peak Oil is simply a fact. Peak Oil is NOT synonymous with “running out of oil.” But the most urgent issue before us does not lie with identifying the precise moment of Peak Oil. What we need to be most concerned with is the day that world petroleum demand outstrips available supply. It is at that moment that the oil markets will change forever – and probably quite suddenly.

Saturday was a pre-conference day for people who wanted to discuss things on a community and personal level. I wanted to see if there was anything I could apply to my business.

Gail Tverberg talked to the group for 15 minutes. In her estimation, when we start on the downside of the oil supply curve it is equally possible that we could be in for a steady decline or that it could be a steep drop off.

That is why the Thirty Meter Telescope, and a serious increase in geothermal energy, are important for us on the Big Island and in Hawai‘i in general.

Food security was top of mind. In cold parts of the country preserving things will be an important activity. Co-op and community gardening, much like was done in Cuba after the Soviet Union collapsed, are also seen as solutions. I get the impression that Hawai‘i is quite a bit more advanced than the mainland in this area.

It is apparent to everyone that you must adapt to the place you are at. “Hoping” is not a plan.

Many of the folks complained that it is very difficult to make people aware of Peak Oil. Gail Tverberg pointed out that she felt that Hawai‘i is more aware than the mainland. This is my sense as well.

But we are far from being as aware as we need to be.