Tag Archives: Peak Oil

Geothermal, Peak Oil, Renewable Energy Sources, Sustainability

We are at a Pivotal Moment & We Need to Make a Commitment

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I spoke at a plenary meeting for federal, state and private enterprise energy experts yesterday at the Honolulu Convention Center. It was put on by the Department of Business, Economic Development and Tourism. I want to share my speech here, too:

Aloha Everyone,

We farm 600 fee simple acres on the Big Island. I am the only person from Hawai‘i to have attended what is now four Peak Oil conferences. I went to the first conference so I could learn about oil, and figure out how to position our farm for the future.

I have an accounting degree. But, as a farmer, I would say our biggest strength is that we are good at adapting to change.

Here are some key observations:

1. The world has been using twice as much oil as it has been finding for more than 20 years. And that trend continues.

2. Economies run on energy. If you take a chainsaw and a gallon of gas, you will cut so many trees. If you take that chainsaw and a half gallon of gas, you will cut less. It’s the same for the world economy. Energy growth is tied to economic growth. If energy is not available in sufficient amounts, the economy cannot keep on growing.

3. “Energy Return on Energy Invested.” It is the net energy that is available for society to use that is important.

In 1930, to get 100 barrels of oil it took the energy of one barrel.

In 1970, to get 30 barrels took one barrel.

Now, it’s 10 or 15-1 and decreasing.

Oil shale and tar sands are in the 5-1 range.

Biofuels is less than 2-1.

But geothermal is at least 10-1, and will last for 500,000 years.

It is estimated that we need 4-1 just to maintain our present society.

The net energy that is available for the use of society is getting gets less and less. In order to stay even, we will need more and more of the low EROI stuff just to stay even. Using geothermal to make electricity costs only half as much as oil.

With the world in recession, the oil price is at $100 per barrel. It seems like we are at the edge of starting down the backside of the oil supply curve. As oil supply starts to decrease, the net energy available decreases too but at an increasing rate.

One may reasonably assume that we are facing permanent recession or worse.

Another way of looking at it is: Net energy minus the energy it takes to get our food equals our lifestyle.

What can we do? The Big Island will be over the hot spot for 500,000 to a million years. The EROI for geothermal is stable and will stay the same for 500,000 years.

Consumer spending is two-thirds of our economy. Affordable energy is key. Let’s all work together to find the solution that works for the community, the environment and the economy.

Iceland is energy- and food-secure. They became that way by using low-cost hydroelectric and geothermal energy. They use their cheap electricity to make aluminum, and with the hard currency from that, they buy the food that they cannot grow. It can be done, but we must force the change!  

At the early ASPO conferences, EROI used to be “fringe” thought, and now it is mainstream. We need to consider this in our planning!

We are at a pivotal moment in Hawai‘i’s history. Business as usual is no longer safe. Like the ancient leaders who made the decision to send the canoes up from the south, we are about to make decisions that will decide the future for coming generations.

We here in this room will make the commitment.  If not now, when? If not here, where? If not us, who?

We can do this. Not, no can. CAN!

Maku‘u Stories, Peak Oil, Renewable Energy Sources

Hawaii Needs to Show the Way, Not Serve as a Warning

Robert Rapier and I have an article in Civil Beat today. Read the article here.

Hawaii Should Show Way to Better Energy Future

Over the past decade, world oil prices have advanced from approximately $25 per barrel to more than $100 per barrel. Had the price of oil merely kept pace with inflation, the $25 barrel in 2000 would have been worth just over $30 in 2010. Thus, there was a fundamental shift in the oil markets.

By 2005, the idea that the price increase was being caused by oil depletion – commonly referred to as “peak oil” – was receiving widespread attention. While some dismissed the idea of peak oil, instead offering up speculation, OPEC, growth in developing countries, or other geopolitical factors as the primary factors behind the advance in prices – oil production remained flat despite record high oil prices. Read the rest

The world is changing, and our next 20 years will be completely unlike the past 20 years. We need to adapt to this change.

We can start by taking a triple bottom line approach to the problem. We need to put the needs of the people first and foremost, we need to consider the effect on the environment and we must make sure that the investment makes sense. It isn’t the strongest that survive; it’s the ones who can adapt that survive.

Chris Martenson’s YouTube video explains in a commonsense way how the world is changing. Economic growth requires energy growth. Energy growth has hit a plateau and so economic growth is slowing down. If net energy starts to decline, there will be serious, and unpredictable, consequences.
We have geothermal, the gift of Pele, to help us cope. We must change and adapt.
Also from the Civil Beat article:

Because of our heavy dependence on oil, it has been said that Hawaii is the canary in the coal mine for the rest of the U.S. But in warning others of impending danger, the canary dies. We do not want to serve as a warning to others; we want Hawaii to be the beacon for the world to see how we have achieved a better future.

Biofuel, Peak Oil, Renewable Energy Sources

Great Podcast About Renewable Energy

Richard Ha writes:

This is a very interesting podcast by Robert Rapier, who spoke at the recent Association of the Study of Peak Oil (ASPO) conference.

He talks about a request for him to rank the top 50 renewable energy companies. By the time he reached the fifth one, it was looking iffy and by the time he reached the tenth company, he did not expect the rest to survive 10 more years.

It really is tough to do what Mother Nature did for free and to be competitive, cost-wise. Some have Mother Nature’s oil embedded in the process and so the break-even point of the renewable oil recedes into the horizon.

Some fail because of bad assumptions – like that the feedstock will be available for a cheap price. Only if the farmer makes money will the farmer grow feedstock.

Scale is a significant issue, too. The process is like cooking turkeys. It’s one thing when one is cooking just one turkey in a bench scale experiment. It is quite another when one is cooking 100 turkeys per hour in a large oven. How do you make sure the turkeys in the middle are not raw and the ones on the edge are not burnt to a crisp?

What can we make of the fact that oil is $100 per barrel and yet we are in a recession? One would expect oil prices to decline in a recession. Could we be in an endless recession?

And what about the difference in the oil consumption of different countries? Will they be in a permanent recession? China uses only two barrels of oil per person per year while the U.S. uses 26 barrels of oil per person per year.

They can grow their economy at $100 per barrel oil, and we are barely keeping our heads above water at the same price? Hmmm.

Let’s move to geothermal now!

Geothermal, Peak Oil

2011 Peak Oil Conference, Part 4: The Answer is Geothermal

“Find three solutions to every problem,  and then find one more just in case.”

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The time for endless debate is over. We need action.

We know that it is becoming increasingly difficult to increase world oil supplies. There is no point in discussing, to a fine point, when Peak Oil will happen. It is more important to know the consequence of not being able to keep up with demand.

The consequence is rising prices. We have seen that when oil prices exceed $100 per barrel, the world economy starts grinding to a halt. But oil is already at $90+ per barrel, and the world is in a slow growth period. Could the “new normal” be slow or no growth?

How much time do we have? Just today we hear that Israel is considering bombing Iran. And business commentators are now looking beyond Greece to Italy. But Italy is too large for Germany and France to save. If the EU unravels, the consequence for the world economy is not pretty. So how much time do we have? I would say, “Not much.”

We need to look hard and find that extra solution to our problem. We need a solution that strengthens the aloha spirit and is proven technology, low cost, stable and an economic driver. Our solution needs to create no emissions and be large enough to make a real difference.

The answer is geothermal. But our electric utility is operating with one hand tied behind its back. It has a fiduciary duty to its shareholders, which prevents it from finding that one solution that solves all our problems.

We need to untie the utility’s hands.

Read the rest of this series on the 2011 Peak Oil Conference:

Part 1

Part 2

Part 3

Peak Oil

2011 Peak Oil Conference, Part 3: Energy Return on Energy Invested

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I was Hawai‘i County’s representative to the 2011 Association for the Study of Peak Oil conference in Washington, D.C., which just concluded.

This was the fourth time I’ve attended the conference. After my first ASPO conference it hit me: I learned too much! It became my kuleana.

This is the third in a series of posts about information gleaned from this year’s conference. Note that everything I’m writing about is based on numbers, not my opinions. I am relaying information from very credible people who have gone through the peer review process and been vetted.

Energy Return on Energy invested (EROI or EROEI)

In a sentence, the definition of EROI: “The energy it takes to get energy – minus the energy it takes to get food – equals our lifestyle.”

Charles Hall, David Murphy and others, who have done peer-reviewed analyses of the concept of EROI, argue that organisms, organizations and civilizations must generate surplus energy in order to survive. A mother cheetah must be able to chase down rabbits and gazelles, miss a few, feed the kids and still have enough energy to run down more or else the species goes extinct. Ancient civilizations followed this principle.

This is Charley Hall, the father of EROI, on the left.

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Awhile ago, I read through his paper “What is the Minimum EROI that a Sustainable Society Must Have?, which he authored with Stephen Balogh and David Murphy, and I immediately got it. At the conference, I asked Charley to autograph a copy of it for me.

I was sitting right next to him and asked him how come there are no analyses for “hot” geothermal, like we have in Hawai‘i and Iceland. His answer was that we are a tiny part of the world solution. I guess so – we are only 2 million out of 7 billion people that are so lucky.

If it takes more energy to get the energy (as in some biofuels), then someone needs to explain to regular folks why we would do that. Otherwise, we start thinking about Easter Island.

Can we pay back our debts if the economy cannot grow? It is clear that the economy cannot stand a triple digit oil price. We have been using twice as much oil as we have been finding for more than 20 years now.

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And it is becoming more difficult and, consequently, more expensive to develop new sources. It seems reasonable to assume that oil prices will rise and fall with demand. But the prices will tend to keep rising as the population’s demand rises and as old fields naturally decline.

And doesn’t modern economic theory assume continuous growth? But growth stops when oil reaches triple digits per barrel. Are we facing the end of growth? It is prudent that we plan for the worse and hope for the best.

Both Gail Tverberg and Jeff Rubin write blogs about this (both their blogs are always available by clicking in the side bar at right).

Here I am with Gail. I cannot refute her arguments, so I spend all my time figuring out workarounds. That’s why I push geothermal so hard. It’s the bridge that will enables other renewables to cross.

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Hawaii Pacific University (HPU) in Honolulu is sponsoring a talk about the end of growth by Richard Heinberg on November  9th. Heinberg is a Senior Fellow-in-Residence at Post Carbon Institute, a nonprofit organization dedicated to “building more resilient, sustainable, and equitable communities.”

This is Richard Heinberg on the left.

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This series of posts about my trip to the 2011 Association for the Study of Peak Oil (ASPO) continues. Read Part 4 here.

Go back to Part 1 and Part 2.

Peak Oil

2011 Peak Oil Conference, Part 2: Impressions From the Conference

This is my fourth Association for the Study of Peak Oil conference. Here are some highlights and some of my impressions:

Robert Hirsch pointed out that what we have is a liquid fuel problem, not an energy problem. Sixty percent of the world oil supply comes from a few giant oilfields. And giant oilfields decline naturally. The problem is that we have been using twice as much oil as we have been finding for 20 to 30 years.

There is some near-term potential: gas to liquids, coal to liquids, heavy oil refining, enhanced oil recovery and energy efficiency. He points out that in the long term we must implement much more electricity use. Robert Hirsch always makes common sense to me. His book The Impending World Energy Mess is well worth reading.

Robert Rapier pointed out that the U.S. uses 23 barrels of oil per person per year, while China uses only two barrels per person. At present oil prices, China’s economy is growing while ours is barely staying above water.

This is a zero sum game – they want to improve their standard of living, and we cannot afford to pay more, so our per barrel use must shrink. It looks to me that the Chinese cannot wait to jump into their cars and drive to McDonalds. I’m thinking, too, that we in Hawai‘i should be trying to implement lower cost energy as a top priority as we move toward renewables. Like geothermal?

Jeff Rubin: Two thirds of our economy is consumer spending. Peak Oil is not about how much oil there is, it’s about how much we can afford to pay for it. To grow the economy, we need cheaper oil. Market clearing prices do not seem to be compatible with economic growth.Transporting goods uses liquid fuels and the longer the distance the more the cost. Debt means borrowing on our future. We have done a lot of that. I wonder, will there be growth so we can pay it back?

There are links to both Jeff Rubin’s and Robert Rapier’s blogs in our sidebar, at right.

From the first ASPO conference that I attended, in Houston in 2007, it was immediately apparent to me that we needed to implement geothermal sooner rather than later.

I also learned a lot on the trip to Iceland that Ro Marth and I took. Iceland had the biggest economic collapse in the history of the world. The banks had been privatized a few years earlier and they just went crazy lending money to anyone without worrying about payback ability.

When the banks could not pay their obligations, the Icelanders let the banks collapse and they are now prosecuting the bankers for fraud. The big story behind all this is that Iceland is pulling themselves out of the hole. And that is exactly what I went to see for myself.

I saw that cheap energy is what saved them. And in Hawaii, we can do the same – with geothermal in the short term and with all the other renewables we have in abundance in the longer term.

Hawaii and Iceland, with a combined population of 2 million people, have the best geothermal resource in the world.

Our Big Island will be over the “hot spot” for the next 500,000 to a million years.

Our two million people, out of the 7 billion people in the world, are so lucky.

More commentary to come….

In the meantime, here are some pictures from Washington, D.C. This is Helen Davis, an energy staff member for Rep. Hirono. I’m so happy to see Hawai‘i’s people represented at the conference.

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Occupying the Capitol. There are rows of tents, all neatly organized. More than 50. I understand there is another Occupy encampment, too.

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When I was walking toward the Capitol, I saw this monument in a park.

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Read Part 3 of this series.

Go back to Part 1.

Peak Oil

Sitting Down With the Face of the Future

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Last week I got a call to meet with a group of young folks at Starbucks. They are very aware of the effects of world population growth running into finite resources. They appealed to me saying they want to help move Hawai‘i off fossil fuels and onto indigenous resources. And they want to move now, not tomorrow!

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They told me that their generation has no hope in Hawai‘i. They said they have no hope of ever owning their own homes. Jobs are hard to come by. Even if one graduates from college, what then? They understand the connection of oil prices to recession and expansion. They know that it is the cost of energy that is affecting our economy.

This meeting really hit me hard. I was talking to people who are actually being affected by the consequences of finite resources. Yet they are absolutely determined to help make a better future for future generations. They are about more than just me; they are about all of us. I am so hopeful for the next generation.

Reflecting on what they told me, I thought about Law Professor and current U.S. Senate Candidate Elizabeth Warren. Watch this clip, about which the Washington Monthly says: “First-time candidates don’t usually articulate a progressive economical message quite this well.”

A quote from the clip:

“You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.

“Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”

Two years ago, I wrote about and linked to another speech she gave. It, too, is really worth a listen. She talks about how much has changed in just the one generation from the 1970s to the 2000s. We went from families having one person as the breadwinner to two people being the breadwinner, yet didn’t gain any ground.

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.

From my blog back then:

In the 2000s, 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.

So much happened in just one generation, 30 years, and we didn’t even notice it. And change is coming even quicker today. What’s happening in the world now makes me think that Elizabeth Warren’s 30 years is being compressed into 10 years or less now. We can see it all around us.

We are already in the middle of it, and many folks are so busy running on the treadmill that they don’t notice it. We do not have the time luxury of acting on wrong information.

That is why I am encouraging folks in important decision-making positions to attend the Association for the Study of Peak Oil conference. Its theme is Truth in Energy.

I am so happy that young people see it and want to do something about it.

They told me: “Not, no can. CAN!”

Geothermal, Renewable Energy Sources

Mark Glick is New Head of DBEDT’s Energy Division

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Jeff Rubin, former Chief Economist for CIBC Bank of Canada, says it’s not about oil supply, but it is more about oil we can afford to burn. I like him because his reasoning makes common sense. If we cannot afford the renewable energy solution, what is the point?

Mark Glick was just appointed head of the Energy Division of the Department of Business, Economic Development and Tourism. Back when I was supporting the Thirty-Meter Telescope, Mark was President of the Sierra Club, and I had an issue with them.

I pointed out that the Sierra Club is anti-Hawaiian in carrying out its policies. I made clear that I was not against the people who belonged to the Sierra Club – I was a member, and the folks were my friends. I just called its policy anti-Hawaiian.

By all indications, Mark is very well-qualified for his new position. But he needs to keep in mind that when choosing renewable alternatives, people have to be able to afford it. The Energy Department’s policies will have a huge effect on Hawai‘i’s economy. Some people, like me, believe it will have the largest effect.

It’s the folks on the lowest rungs of the economic ladder that get their lights turned off first. Too often, they will be Hawaiians.

Energy policy must balance distributed generation, so we do not end up with the “haves” leaving the grid, and the “have nots” and small businesses being left to pay for the grid.

If we use proven-technology, indigenous, low-cost energy – such as geothermal – we will become more competitive with the rest of the world. This will stimulate economic activity.

Hawaii is blessed with abundant natural energy resources. We must maximize our resources. But we also need to prioritize wisely.

Choosing low-cost energy will benefit everyone; not only the rubbah slippah folks.

Geothermal, Peak Oil, Renewable Energy Sources

Talk: On HECO, ‘Time is Running Short’

Yesterday I gave a talk at the Sheraton Outrigger in Keauhou. The talk was for the Water Works Association of Hawaii, which is the umbrella association of all of Hawai‘i’s water departments.

The Water Works Association meeting agenda. 

I started off by describing all the different hats I wear: Farmer; Co-Chair of the Geothermal Working Group, and Chairman of the Board of Ku‘oko‘a.

I talked about the Hawaiian Electric Company (HECO) operating with one hand tied behind its back. HECO has a fiduciary duty to its shareholders and so it cannot do all the things it might want to do to help Hawai‘i’s people. For instance, it would have a difficult time lowering Hawai‘i’s electricity rates – by closing its oil-fired plants and bringing on significant amounts of geothermal – without hurting its shareholders’ stock price.

HECO is under much pressure lately. Ku‘oko‘a wants to untie HECO’s hand so it can be the utility all its people want it to be. We don’t want to take HECO over; we want to empower HECO for the benefit of Hawai‘i’s people.

The main point I tried to make in my talk was that time is getting short. And that there is more than enough evidence to show that oil prices will rise in the future. It is not about whether or not one particular theory is right or wrong. The evidence we see all around us is compelling enough.

The reason I know about this is that I have attended three Peak Oil Conferences, and this subject has been on my radar for more than five years now.

We know that the peak of oil discovery was in the 1960s. For the last 20 years, we have been using twice as much oil as we have been finding.

We also know that all oil fields decline eventually. In fact, the natural decline rate of all the oil fields put together requires us to find a Saudi Arabia every two to three years. Clearly we have not been doing this.

Oil exporting countries will use more and more of their own oil. This means less for the rest of us. They must do this, in order to keep their people happy, or the dictators will get thrown out of office.

China and India use much less oil per person than we do, yet their economies keep on growing. The Honolulu Star-Advertiser points out that our electricity rates are approaching the high point of 2008. Our people are suffering, and yet China and India can pay this oil price while their economies keep growing.

And we have not even passed the peak of oil supply. Trying to be safe by doing nothing is no longer safe. We need to think different.

More on all this in my recent editorials for Civil Beat.

Peak Oil

Peak Oil Conference in November

In November, I will attend my fourth Association for the Study of Peak Oil (ASPO) conference.

I highly recommend that Hawai‘i people in decision-making positions attend.

This year’s conference theme is “Truth In Energy,” and it will focus on the importance of transparent and reliable energy information, and the need to educate influential leaders and the public on the peak oil energy challenges facing our nation.

Energy is a very complex subject, and it’s sometimes difficult to separate the truth from the marketing hype. The value I get from attending these conferences is in being able to determine the difference between the middle ground, the fringe, the hopesters and the hypesters.

For example, when I went to my first ASPO conference in Houston, a speaker pointed out that the peak of oil production in the U.S. occurred in 1970. Although Saudi Arabia keeps their oil reserve data secret, there are ways that regular folks can make reasonable assumptions. He said that there were people from Saudi Arabia working in the oil industry in Houston, and that they had learned how to not waste their resource.

On April 13, 2008, Reuters reported that King Abdullah said, “When there were some new finds, I told them, ‘No, leave it in the ground, with grace from God, our children need it.’”

That was not reported in the mainstream media, but because I went to the ASPO conference, I read about it. I heard the King very clearly.

There are also others who, through regular means like Google Earth, make reasonable assumptions.

Take a look at this animation and narrative about Saudi oil fields. It seems reasonable to assume that the Saudis cannot keep on pumping endlessly.

Any “rubbah slippah” person can understand that this shows more and more oil being sucked out of the ground, and it will begin to decline. It’s all about supply and demand, and because oil is a finite resource, we should expect rising oil prices.

At the 2009 conference in Denver, someone showed a graph that pointed out the direct relationship between oil price, GDP and the last several recessions. The data showed that when oil prices exceeded $85 dollars or so, we could expect a recession.

The worrisome part is that hardly anyone makes the oil cost/recession connection. If they did, they would realize that unless we in Hawai‘i find a way to avoid the rising cost of fuel and electricity, we are at best looking at a future of very little economic growth. Because we are more reliant on oil than most, our future could be very bleak.

That is why we, in Hawai‘i, must force the change and go to low and stable cost geothermal faster, rather than slower. This will allow us to dodge the oil bullet, and will give us the opportunity to unleash the abundance of renewable energy alternatives available to us.

I really returned from a study trip to Iceland and learned that by using cheap geothermal and hydroelectric, that country is now food and fuel secure.

I am noticing more and more homeless people here. Many of them are working homeless. As we bring on more low-cost, stable geothermal, our standard of living and economic activity will rise. More and more of the working homeless will be able to get their families off the street. We can do this without having to tax the people.

We must force the change, but we will need everyone’s help. We are all in this together.

Dr. Charles Schlumberger, who is in charge of the airline section of the World Bank, spoke at the last ASPO conference. Watch video of his talk The Future of Air Transportation.

Jeff Rubin, former Chief Economist for the Canadian bank CIBC, spoke too, explaining how the world economy will shrink as oil prices rise. Here is his Oil and the End of Globalization speech.

This has very strong implications for Hawai‘i. We all know that we must get off oil. But the problem is the cost and practicality of the solution. Solutions need to be cost-effective and proven technology, as well as environmentally friendly.

Geothermal fits this requirement. But we need to move much faster than we have been.

When I return from this year’s conference, I will post this year’s speeches.