Tag Archives: EROI

Energy, Geothermal, Hawaii Island Energy Cooperative, Mauna Kea, Peak Oil

Making Life Better, Part 3: Why These Big Island Issues?

November 2, 2016 Richard Ha 1 Comment

I want to talk about why I’m involved in all these different Big Island issues: Geothermal. The Thirty Meter Telescope. The Hawaii Island Energy Cooperative.

These are not random, unrelated concerns. They are all directly related to what’s happening in our world and on our island.

I am always working toward making our lives better here on the Big Island, and making this a better place for our children and grandchildren.

Everything came together for me when I started going to the Peak Oil conferences in 2007. That’s where I learned about Charlie Hall and his theory of Energy Return on Investment (EROI).

What was interesting to me about that his is a biophysical approach. A systems approach. It doesn’t put everything into its own silo, but instead takes everything into consideration all together.

EROI boils down to one basic concept: You have to have net energy to survive. This concept is discussed as an economic concept, but really it goes all way back to biology. Think about a rainbow trout swimming in a river and catching flies. At the end of the day, it has to have caught enough flies not only to survive but also to reproduce.

It’s the same for every animal. Look at cheetahs. They’ve got to be able to run down antelopes and rabbits and whatever they eat, and still have energy left over to reproduce and raise their kids.

It takes energy to get energy. We have to be able to get at our source of energy – like oil – and still have enough left over to power our society.

This concept applies to organisms, organizations and civilizations – everything.

How These Big Island Issues Apply

I’m no scientist. I’m a farmer who’s spent a lot of time out there on the farm, dealing with the physical stuff, out in the rain and the dirt. I come at this practically, always remembering my Pop’s lesson about, Not no can, can.

I am always trying to find a solution to something or other by thinking hard and planning ahead. When I went to school I learned there’s a name for this. It’s called “contingency planning.”

And it’s what we need to be doing now. Contingency planning. We need to take sustainable actions now to prepare for a better future.

What makes a solution sustainable? It has be economically, environmentally and socially sustainable.

As for the economic part, people understand what you need to do to make that work. Environmentally, too.

What is generally missing, and what I gravitate toward, is the social part of sustainability: leaving no one behind. I always come at everything from that point of view.

When we look at the Big Island, we have the lowest median family income, a homelessness problem and many other social problems. When I look at solutions, I want to make sure they address these problems.

Solutions

From what I see, education is the game changer. There are clear correlations between education and family income. And education and family income have a strong impact on the other problems. It’s not very complex.

The TMT brings $50 million to our island, earmarked solely for our kids’ education. And geothermal and the Hawaii Island Energy Cooperative bring smart energy solutions to our peak oil crisis.

I’ve been influenced by my Pop, who taught me to look long term. When you’re looking long term, you don’t have to make radical decisions you might regret later. When you focus on the long term, you can make gradual changes to get to where you want to go.

We need to have a sustainable energy situation, and that will help with everything else.

Energy

Hawaii Energy Picture: Making Our Lives Better

October 24, 2016 Richard Ha

How do we make the Hawaii energy picture, and our futures, better?

I sense that young folks know something needs to change in our modern world. And I see lots of folk helping each other cope.

This is all very encouraging, so I want to have a conversation: What can we do to make things better for all of us? I’m going to be posting about this in the next few weeks.

I’m going to talk about it being important that we take care of ourselves here in Hawaii, because nobody else is going to worry about us. In a world of declining energy, the pie is getting smaller and everybody is jockeying and fighting for a smaller piece of pie. This is when you get discontent. Look, for instance, at the current presidential election.

But the solution is not fighting with each other like what’s going on right now. The solution is helping each other.

The bottom line is that in whatever we choose to do, the pluses have to exceed the minuses.

This is why I look at the Thirty Meter Telescope (TMT) as a plus. It supports education, and that helps us develop new technologies. Technology is not energy, but it helps us to extend energy. Also, investment in the TMT is all coming in from foreign dollars, instead of us taxing ourselves. All pluses.

Another thing we have that’s clearly a plus in terms of energy is geothermal. We will be over the “hotspot” that provides us with geothermal energy for 500,000 to a million years. That isn’t going away. A huge plus.

And GMOs are a plus because they help us find different ways to keep feeding ourselves, which of course is critical.

This is what it all boils down to. This is the graph that changed my life.

I first saw it during the 2007 Association for the Study of Peak Oil conference in Houston. It shows, simply, that we have been using much more oil than we’ve been finding.

Obviously there will be consequences if we don’t either:

conserve what oil we have
find affordable alternatives
or use technology to extend what energy we have.

It takes energy to do work and Gross Domestic Product (GDP) is a measurement of work, so this graph implies the world GDP may be challenged if we don’t find alternatives.

It was clear to me that this was going to be the biggest challenge facing Hawai‘i.

I continued studying this and also attended four more ASPO conferences. And I realized I was the only person from the state of Hawai‘i that was attending these conferences and hearing all these experts, and Hawaii energy became my kuleana. It’s not that I wanted it or needed it; I just felt stuck with the knowledge and knew I had to do something with it.

My friend, Professor Charles A.S. Hall, who is known as the father of Energy Return On Investment (EROI), was someone I found clear and easy to understand.

What it’s about and what we can do

I am going to revisit a lot of what I’ve learned since I started studying about this problem in 2007, and write about it here. For example, it takes energy to get energy (for example, to get oil up out of the ground) and net energy is decreasing as we use increased amounts of energy to access more difficult sources.

Is it surprising that World GDP is lessening? Not many of our leaders seem to be paying attention to these things.

So to get back to my question above: What changes can we make? What can we do to make things better for all of us?

People have ideas, and I’m going to write some posts about what makes sense to me (and others). Stay tuned.

Energy

Declining Energy Continues, is Significant

September 25, 2016 Richard Ha

Above all the local Hawaii issues, we still have the worldwide consequences of declining energy resources. The Bakken Field situation is nothing new — it’s something I’ve been well aware of over the years as I attended five Association for the Study of Peak Oil conferences.

From Charles Hall, who is a world-renowned systems ecologist:

The Death of the Bakken Field has Begun: Means Big Trouble For The U.S.

The Death of the Great Bakken Oil Field has begun and very few Americans understand the significance. Just a few years ago, the U.S. Energy Industry and Mainstream media were gloating that the United States was on its way to “Energy Independence.”

Unfortunately for most Americans, they believed the hype and are now back to driving BIG SUV’s and trucks that get lousy fuel mileage. And why not? Americans now think the price of gasoline will continue to decline because the U.S. oil industry is able to produce its “supposed” massive shale oil reserves for a fraction of the cost, due to the new wonders of technological improvement.

I actually hear this all the time when I travel and talk to family, friends and strangers. I gather they have no clue that the Great Bakken Oil Field is now down a stunning 25% from its peak in just a little more than a year and half ago:

The mighty Bakken oil field located in North Dakota reached peak production in December 2014 at 1.26 million barrels per day (mbd) and is now down to 942,000 bd. This decline is no surprise to me or to my readers who have been following my work for the past several years.

I wrote about the upcoming crash of the Bakken oil field in my article (click on image to read article)– Published, NOV. 2013:

I ended the article with these sobering words:

There are only so many drilling locations available and once they run out, the Great Bakken Field will become a BUST as the high decline rates will push overall oil production down the very same way it came up.

Those who moved to the frigid state of North Dakota with Dollar signs in their eyes and images of sugar-plums dancing in their heads will realize firsthand the negative ramifications of all BOOM & BUST cycles.

Well, the Bust of North Dakota economy has arrived and according to the article, “The North Dakota Great Recession“:

Unfortunately by April 2015 it was clear that the oil markets were in a secular decline brought on by oversupply in the global energy markets fueled by a deep recession in China. As a result, companies started to lay off workers, and over the following months caused a massive exodus of people as jobs were eliminated. Nobody is exactly sure how many people have left the state, but some put estimates as high as 25,000.

The strongest real estate market continues to be Watford City with the weakest in Minot. However, even in Watford City the price of a three-bedroom rental home has come down from $2,500 in 2015 to a current price of $1,400. This represents a 44 percent decline of the rental price in the market.

Some folks believe the reason for the decline in oil production at the Bakken was due to low oil prices. While this was part of the reason,the Bakken was going to peak and decline in 2016-2017 regardless of the price. This was forecasted by peak oil analyst Jean Laherrere. I wrote about this in my article below (click on image to read article)– Published, APRIL 2015:

I took Jean Laherrere’s chart and placed it next to the current actual Bakken oil field production:

As we can see in the chart above, the rise and fall of Bakken oil production is very close to what Jean Laherrere forecasted several years ago (shown by the red arrow). According to Laherrere’s chart, the Bakken will be producing a lot less oil by 2020 and very little by 2025. This would also be true for the Eagle Ford Field in Texas.

According to the most recent EIA Drilling Productivity Report, the Eagle Ford Shale Oil Field in Texas will be producing an estimated 1,026,000 barrels of oil per day in September, down from a peak of 1,708,000 barrels per day in May 2015. Thus, Eagle Ford oil production is slated to be down a stunning 40% since its peak last year.

Do you folks see the writing on the wall here? The Bakken down 25% and the Eagle Ford down 40%. These are not subtle declines. This is much quicker than the U.S. Oil Industry or the Mainstream Media realize.

And… it’s much worse than that.

The U.S. Oil Industry Hasn’t Made a RED CENT Producing Shale

Rune Likvern of Fractional Flow has done a wonderful job providing data on the Bakken Shale Oil Field. Here is his excellent chart showing the cumulative FREE CASH FLOW from producing oil in the Bakken:

I will simply this chart by explaining that the BLACK BARS are estimates of the monthly Free Cash flow from producing oil in the Bakken since 2009, while the RED AREA is the cumulative negative free cash flow. As we can see there are very few black bars that are positive. Most are negative, heading lower.

Furthermore, the red area shows that the approximate negative free cash flow (deducting CAPEX- capital expenditures) is $32 billion. So, with all the effort and high oil prices from 2011-2014 (first half of 2014), the energy companies producing shale oil in the Bakken are in the hole for $32 billion. Well done…. hat’s off to the new wonderful fracking technology.

According to Rune Likvern in his article on the Bakken, he stated the following:

Just to retire estimated total debts (about $36 Billion, including costs for DUCs, SDWs, excluding hedges and income/loss of natural gas and NGLs) would require about 7 years with extraction and prices at Jun-16 levels.

Nominally to retire all debts (reach payout) would take an (average) future oil price close to $65/bo (WTI) for all the wells in operation as of end June – 16. This is without making any profit.

For the wells in production as per Jun-16, the total extraction of these will decline about 40% by Jun-17, and depletes their remaining reserves with about 20%. By assuming the operations remain cash flow neutral, total debt remains at $36 B in Jun-17.

As from Jul-17 this would now require an average oil price of about $73/bo (WTI) for these wells to nominally retire all debts (reach payout). Additional wells will add to what price is required to retire the total debt.

What Rune is stating here is that the $36 billion in total cumulative debt will occur by June 2017. Thus, it would take an average $65 a barrel to just pay back the debt in seven years. With the way things are going in the U.S. and world economies, I doubt we are going to see much higher oil prices.

Furthermore, the work by Louis Arnoux and the Hills Group suggest the price of oil will fall, not rise due to a Thermodynamic Collapse. More about this in an upcoming interview.

The United States Is In Big Trouble & Most Americans Have No Clue

As I have been documenting in previous articles (going back until 2013) the U.S. Shale Oil Industry was a house-of-cards. Readers who have been following my work, based on intelligent work of others, understood that Shale Oil is just another Ponzi Scheme in a long list of Ponzi Schemes.

From time to time, I look around different websites that publish my work and read some of the comments. I am surprised how many individuals still don’t believe in Peak Oil even though I explained the Falling EROI – Energy Returned On Investment quite clearly.

For some strange reason, some individuals cannot use deductive reasoning to destroy lousy conspiracy theories. Moreover, if they do believe in Peak Oil, then they think there is a wonderful “Silver-Bullet Energy Technology” that will save us all. I gather they believe this because the REALITY and IMPLICATIONS of Peak Oil are just too horrible, to say the least. So, holding onto HOPE that something will save us, just in the nick of time, is better than accepting the awful reality heading our way.

And the awful reality of Peak Oil will be felt more by Americans as their lifestyles have been highly elevated by the ability to extract wealth and resources from other countries through the issuing of massive amounts of paper Dollars and debt. Basically, they work, and we eat.

Unfortunately, the propping up of the U.S. market by the Fed and the domestic shale energy Ponzi scheme is running out of time. This is why it is imperative for investors to start moving out of Bonds, Stocks and Real Estate and into physical gold and silver to protect wealth.

For the wealthy investor or institution that believe a 5-10% allocation in physical gold is good insurance, you are sadly mistaken. While Donald Trump is receiving more support from Americans in his Presidential race, his campaign motto that he will “Make American Strong Again”, will never happen. The America we once knew is over. There just isn’t the available High EROI – Energy Returned On Investment energy supplies to allow us to continue the same lifestyle we enjoyed in the past.

So, now we have to transition to a different more local or regional way of living. This new living arrangement will be based on capital that is “STORED ECONOMIC ENERGY or WEALTH.” This can only come via the best sources such as physical gold and silver.

If individuals and countries have been acquiring physical gold and silver, they will be in better shape and will be able to enjoy more options than those who have been selling their gold and accumulating lots of debt and derivatives.

Check back for new articles and updates at the SRSrocco Report. You can also follow us at Twitter, Facebook and Youtube.

Geothermal, Peak Oil, Renewable Energy Sources

Charles Hall on Fossil Fuels & Economic Growth

October 16, 2014 Richard Ha

Richard Ha writes:

This Scientific American article talks about fossil fuels, economic growth, and why I'm always talking about the importance of our (much cheaper) geothermal energy here.

It looks at the work of Charles Hall, who talks about how the energy it takes to obtain energy, minus the energy you use to get your food, equals your lifestyle. That formula – energy return on investment, or EROI – lets us compare how we live now with how Hawaiians lived in older times. It allows us to compare apples to apples.

I know Charlie Hall very well. I brought him to Hawai‘i to give talks about this at UH Hilo and Manoa, as well as to visit Puna Geothermal Venture and our farm.

From the Scientific American article Will Fossil Fuels Be Able to Maintain Economic Growth? A Q&A with Charles Hall:

Q. What happens when the EROI gets too low? What’s achievable at different EROIs?

A. If you've got an EROI of 1.1:1, you can pump the oil out of the ground and look at it. If you've got 1.2:1, you can refine it and look at it. At 1.3:1, you can move it to where you want it and look at it. We looked at the minimum EROI you need to drive a truck, and you need at least 3:1 at the wellhead. Now, if you want to put anything in the truck, like grain, you need to have an EROI of 5:1. And that includes the depreciation for the truck. But if you want to include the depreciation for the truck driver and the oil worker and the farmer, then you've got to support the families. And then you need an EROI of 7:1. And if you want education, you need 8:1 or 9:1. And if you want health care, you need 10:1 or 11:1.

Civilization requires a substantial energy return on investment. You can't do it on some kind of crummy fuel like corn-based ethanol [with an EROI of around 1:1].

A big problem we have facing the alternatives is they're all so low EROI. We'd all like to go toward renewable fuels, but it's not going to be easy at all. And it may be impossible. We may not be able to sustain our civilization on these alternative fuels. I hope we can, but we've got to deal with it realistically.

Do you think we're facing limits to growth now?

I think if you correct the U.S. GDP for debt—in other words, the debt is some kind of not-real growth—then I think the GDP hasn't grown at all since 2005. It's just grown through debt. I think clearly growth has declined; it's possible that growth has either stopped or may soon stop.

Read the rest of the article

Geothermal, Peak Oil, Renewable Energy Sources

Can Geothermal Exist In Harmony With the Hawaiian World View?

March 9, 2013 Richard Ha

Richard Ha writes:

On Thursday, Kalei Nu‘uhiwa and I spoke on a geothermal panel at the UH Manoa’s Richardson School of Law.

Kalei talked about Papakū Makawalu, a Hawaiian deconstruction of the universe into its basic component parts. Here is an interesting talk she gave on this topic about a year ago. (It’s about 13 minutes; well worth a watch.)

From the Edith Kanaka‘ole Foundation:

Papakū Makawalu is the ability of our kupuna to categorize and organize our natural world and all systems of existence within the universe. Papakū Makawalu is the foundation to understanding, knowing, acknowledging, becoming involved with, but most importantly, becoming the experts of the systems of this natural world.

At our panel discussion, the essential question was: “Can geothermal exist in harmony with the Hawaiian world view?”

Kalei’s answer, as I understood it, was, “Yes – If we have a full discussion ahead of time to assure that all concerns are adequately addressed. We need to understand and be comfortable in knowing what its effect on the Hawaiiian environment would be.”

I agree with this point of view. When we were asked what would we do if one of the geothermal developers did not agree to abide by this I said, “Then they need to get out of here!”

Hawaiians in pre-contact time were very successful. Here in Hawai‘i today, we are less successful.

This is why I really like Charles Hall’s EROI concept, which measures net energy. It provides empirical data that compares use of energy from ancient times to the present. It’s a way of comparing apples and apples across time.

Biofuel, Geothermal, Peak Oil, Renewable Energy Sources, Sustainability

Very Simple Explanation of ‘Energy Return on Investment’

March 4, 2013 Richard Ha 1 Comment

Richard Ha writes:

Every organism, organization and even civilization needs surplus energy or it goes extinct.

When a mama cheetah catches an antelope, for instance, she needs to get enough energy from consuming that antelope to take care of her kids.

Let’s say all the antelopes are very skinny, and the energy she gets from eating a skinny antelope only gives her enough energy to make one more sprint, and that’s all.

That would be described as an "energy return on investment," an EROI, ratio of 1-1. She has no excess energy available to do anything but catch her next meal. That would be a very scary existence: She would have to catch an antelope on every single sprint, or her species would go extinct.

But if the antelopes got fatter, and the cheetah could make two sprints from eating one antelopes, we would call this an EROI of 2-1.

When the cheetah could make five runs from eating one antelope, things would be starting to look better (EROI 5-1). She would have energy left over to do more than just survive. She could spend time washing and playing with the kids.

At an EROI of 10 to 1, she could send the kids to grad school; things would be wonderful.

At an EROI of 30 to 1, the cheetah population would start to grow. The cheetahs would move into condominiums and take vacations in Hawai‘i.

So what does this mean in real life? Here’s some history.

In the 1930s, we could extract 100 barrels of oil from the ground by using the energy we got from one barrel of oil. That’s an EROI of 100-1.

By 1970, we were only getting 30 barrels of oil from the use of one barrel (an EROI of 30-1).

And in 2013, it’s around 10 barrels of oil (EROI 10-1).

Tar sands is around 5-1.

And biofuels are less than 3-1. Some biofuels (for example, alcohol from corn) are barely more than 1-1. You can see why putting our money and efforts into biofuels hardly makes sense.

Especially when you realize that geothermal, as we have in Hawai‘i, appears to have an EROI ratio of 11-1. It’s also significant to note that this rate won’t change anytime soon. The Big Island will be over the “hot spot,” which creates our geothermal conditions, for 500,000 to 1 million years.

Here is an article about the minimum EROI a sustainable society must have, by Charles A.S. Hall, Stephen Balogh and David J. R. Murphy.

What don’t we understand about this?

Biofuel, Peak Oil

We Need More People With Cutting-Edge Energy Knowledge!

February 25, 2013 Richard Ha 1 Comment

Richard Ha writes:

Hawai‘i should be sending more people to the Association for the Study of Peak Oil (ASPO) conference. The folks at ASPO are on the leading edge of energy data interpretation. We need more people with cutting -edge energy knowledge.

For example, for several years now ASPO folks have been utilizing Energy Return on Investment (EROI) as a tool to evaluate energy
options.

If HECO had understood the concept and its parameters, it
may not have committed to Aina Koa Pono’s biofuel project so wholeheartedly.

Biofuels, in general, have very low EROI ratios (net energy). It takes a ratioof 3 to 1 just to maintain society’s petroleum infrastructure. Biofuels, except for cane ethanol, are lower than 2 to 1.

If we can’t make money in Hawai‘i now with cane ethanol, what makes us think we can do cellulosic biofuels, which are more costly and more difficult?

Despite spending hundreds of millions of taxpayer dollars, there are zero commercial competitive cellulosic biofuels in production
today. Zero. We wish AKP well, but it should use its own money, not that of the rate payers.

The shale oil and shale gas story is probably only be an interim solution. Aubrey McClendon, the fracking cheerleader of Chesapeake Energy, has been removed as its Chairman and will soon resign as CEO. The ASPO folks have known for several years that shale oil and gas is a bunch of financial smoke and mirrors.

When HECO responded to Consumer Advocate questions about how it justified its pricing, the utility used the Energy Information Agency (EIA) 2012 AEO report’s high-case scenario for its long-term forecast.

But the EIA’s short-term forecast, just a couple of weeks ago, estimates the 2014 price of oil at $101/barrel – while HECO estimates that oil will cost $180/barrel in 2015. The rate payer wouldn’t care about this if they didn’t have to subsidize the biofuels at $200/barrel.

Putting a secret $200/barrel biofuel surcharge on rate payers, and then telling them, “Trust us, this won’t hurt much” – while raising the pay of top executives – stands in sharp contrast to the CEO of Japan Airlines, who insists on being treated exactly like his workers. Watch that short (2:20) video for a very different approach than we are used to. Really interesting.

Community, Peak Oil

World-Renowned Systems Ecology Expert Charles A.S. Hall Speaks in Hilo

January 7, 2013 Richard Ha

Richard Ha writes:

On Friday, Professor Charles A. S. Hall gave two free lectures at UH Hilo. Hall is a world-renowned systems ecology and biophysical economics expert, and is considered the father of modern day Energy Return on Investment (EROI).

Here is a video, approximately 30 minutes long, from a previous talk of Professor Hall’s.

At UHH, he talked about a systems approach to energy issues here in Hawai‘i.

A “systems approach” is a fancy way to say: Use what you have to come to a good result. It’s about using all we have available to us, in a commonsense way, to move in the right direction. It’s not rocket science.

For a long time now we have known that the resources supporting our world population are finite. Professor Hall approaches these issues from a scientific point of view, i.e., one based on data. His analysis and conclusions can be duplicated by others.

Friday night’s audience was made up of legislators, environmentalists, proponents of Hawaiian culture, University of Hawai‘i staff and students, etc. When Professor Hall advocated for a “systems approach” to our resource issues, they broke into spontaneous applause.

He was startled by the response, but the folks in the audience knew that if we do not start working on commonsense solutions, we’re going to be in deep Kim Chee in the future.

We’ve begun a conversation now about bringing together multiple disciplines, such as agriculture, engineering, energy and more. The idea is to cut to the chase and work on solutions.

For example, in food production, we know that the micronutrients that might be deficient are zinc and boron, and the macronutrients that might be limiting are nitrogen and potassium. Phosphorous
is there; it’s mainly tied up in the soil. So, as we attempt to solve energy issues, how can we simultaneously address issues of food production?

And maybe we should be teaching this to our keiki, so that by the time they are ready to run things, they have a true view of the world.

We all need to be on the same page, solving real problems for all of us—not just for a few of us.

The folks in Professor Hall’s lecture were all realists. This is why I say that I am optimistic about our future here on the Big Island.

Community, Peak Oil

Free UH Hilo Talk from Expert on the Economics of Energy

December 13, 2012 Richard Ha 1 Comment

Richard Ha writes:

Professor Charles A.S. Hall will give a free lecture on “Peak Oil, EROI and Your Financial Future in Hawai‘i.” It will be at UH Hilo on Friday, January 4th at 6:30 p.m.

Professor Hall received the Matthew R Simmons/M. King Hubbert Award for excellence in education at the 2012 Association for the Study of Peak Oil (ASPO) conference, mostly for his work on Energy Return on Investment (EROI).

From UH Hilo Chancellor Donald Straney’s blog:

Announcement: Expert on the economic impact of energy costs to speak at UH Hilo Jan. 4

Dec.13, 2012

Charles A. S. Hall

The University of Hawai‘i at Hilo College of Agriculture, Forestry & Natural Resource Management and Chancellor Don Straney will sponsor a free public lecture on the economic impact of rising energy costs by New York State University Professor Charles A.S. Hall.

The address, “Peak Oil, EROI and Your Financial Future in Hawai‘i,” is scheduled for Friday, Jan. 4, 2013, at 6:30 p.m. in University Classroom Building room 100.

Hall, the author of Energy and the Wealth of Nations: Understanding the Biophysical Economy, will explain how high energy prices reduce discretionary incomes by using the concept of Energy Return on Investment (EROI).The lecture is free and open to the public. For more information, contact Alyson Kakugawa-Leong.

He will also speak on O‘ahu on January 10th; details of that free lecture to be announced.

You can read more about Professor Hall in this post Economics & a Hawaiian Way of Thinking.

Peak Oil

Economics & a Hawaiian Way of Thinking

November 23, 2012 Richard Ha

Richard Ha writes:

It’s not whether or not the energy is green; it’s the price of
the energy that matters.

High price energy results in people having less
discretionary income. We know this to be true in our gut.

Professor Charles A. S. Hall explains how this works using
the concept of “Energy Return on Investment” (EROI). This concept takes the world of economics and ties it in with our physical world.

It’s a different way of understanding economics in that it
explains how things actually work, and it’s a way that Hawaiians can relate to
at a gut level.

Ancient Hawaiians had a gift economy that was land- and environment-based: The more one gave, the more one received. This traditional system is quite different from the modern market economy, where the more one receives, the more one receives.

Many modern-day Hawaiians can play in both worlds. But there
are many other Hawaiians that just don’t feel right. Me included.

Professor Hall will give a series of lectures at UH Hilo and
UH Manoa. At UH Hilo, he will speak on January 4, 2012 and at UH Manoa, on
January 9th and 10th. Details to follow.

He is retiring soon, and we have asked him to be a guest lecturer here during the Winter/Spring semester. He has agreed. He will be using his new book Energy and the Wealth of Nations.

This video, titled Peak Oil, Declining EROI and the New Energy-Economic Reality with Dr. Charles A.S. Hall, is very much worth watching. It’s 1:38:18. Watch it straight through, or jump straight to specific topics as follows:

Minute:

4:54 Importance of energy to economics

26:39 Peak Oil is not the focus. Cessation of oil and energy production is the problem

27:54 Energy Return on Investment (EROI)

33:35 U.S. has lots of coal – in an emergency

34:30 EROI is driving prices

38:55 The trouble is, we need high EROI. How do we do that?

45:15 Cheese slicer model. Higher energy price in, less discretionary income out

50:44 Conclusions for the U.K. The principles are the same everywhere

1:32:40 Charles Hall talks about guest lecturing in Hawai‘i