Tag Archives: Peak Oil

Government, Peak Oil

New York Times Op-Ed Piece on ‘The Power of Foreign Oil’

Former National Security Adviser Robert McFarlane and James Woolsey, former CIA Director and board member of Ku‘oko‘a, wrote this op-ed piece that appeared in the New York Times on Tuesday:

How to Weaken the Power of Foreign Oil

By ROBERT C. McFARLANE and R. JAMES WOOLSEY

Published: September 20, 2011

OUR country has just gone through a sober national retrospective on the 9/11 attacks. Apart from the heartfelt honoring of those lost — on that day and since — what seemed most striking is our seeming passivity and indifference toward the well from which our enemies draw their political strength and financial power: the strategic importance of oil, which provides the wherewithal for a generational war against us, as we mutter diplomatic niceties.

Oil’s strategic importance stems from its virtual monopoly as a transportation fuel. Today, 97 percent of all air, sea and land transportation systems in the United States have only one option: petroleum-based products. For more than 35 years we have engaged in self-delusion, saying either that we have reserves here at home large enough to meet our needs, or that the OPEC cartel will keep prices affordable out of self-interest. Neither assumption has proved valid. While the Western Hemisphere’s reserves are substantial and growing, they pale in the face of OPEC’s, which are substantial enough to effectively determine global supply and thus the global price…. Read the rest

At the same time, the bipartisan United States Energy Security Council was being introduced to the public in Washington. In addition to McFarlane and Woolsey, it includes Former Secretary of State George P. Shultz and two former Secretaries of Defense, William J. Perry and Harold Brown, as well as two other former National Security advisers, two former Senators, a Nobel Laureate, a former Federal Reserve Chairman, and several Fortune-50 Chief Executives (including John D. Hofmeister, former president of Shell Oil in North America).

Read its take on the issue here, and the group’s mission statement.

The U.S. mainland has a transportation problem because it depends on fossil fuel for 90 percent of its transportation needs. But Hawai‘i is especially vulnerable. We depend on fossil oil for transportation – but, unlike most places in the world, we also rely on oil to generate our electricity.

We must pay attention and force the change necessary to protect ourselves and future generations. It is no longer enough, or safe, to rely on others. We must take our future into our own hands.

Geothermal, How We Do It, Hydroponics

Forcing Change

On Saturday, I spoke at a workshop on soil-less farming, which was put on by the College of Tropical Agriculture and Human Resources at UH Manoa. The core group was made up of aquaculture enthusiasts, and the workshop expanded into hydroponics (the growing of crops in soil-less media). About 170 people attended.

WorkshopParticipants

Fred Lau spoke on the challenges that he has faced while developing his aquaponic operation. Tim Mann and Susan Friend spoke on their Friendly aquaponic operation on the Big Island. They sell modular aquaponic systems with complete, how-to instructions.

Tisha Uyehara spoke about marketing produce. She pointed out the importance of growing what is in demand, and in the quantity and quality that retailers need.

I was asked to speak about Hamakua Springs’ hydroponic tomatoes. I started by asking how many in the audience were new farmers or folks who are interested in farming. Maybe 40 people raised their hands. They looked to be younger folks, in their 20s to 30s. I have noticed that lots of folks are interested in farming; they are just trying to figure out how they can make a living at it. I got the feeling that most of the audience was made up of community folks.

Instead of talking about the technical details of our operation, which they could learn by taking courses or getting information from the internet, I decided to share with them the thought processes that went into developing our farm.

I related how my Pop told us small kids to look for three answers to every problem and then find one more. He also said, “There are a thousand reason why no can; I am only looking for the one reason why Can!”

I told them about being influenced by my experiences in the jungles of Vietnam, where the unwritten rule was that “We all come back or no one comes back.” I liked that attitude of taking care of each other. Although I had flunked out of UH earlier, this time I knew I wanted to go into business and so I decided to major in accounting, in order to keep score.

Then Pop asked me to come and run the family poultry farm. I had no money, but really that was a blessing, because then I could not lose money. Instead, I gained experience. We traded chick manure to get banana keiki, and eventually grew to be the largest banana farm in Hawai‘i.

Along the way, we had to change and adapt constantly, and so change is second nature to us. We just look into the future five to 10 years, and force the changes to get us there. I told the audience that this is the secret to our survival. It isn’t rocket science, but is common sense: Being able to adapt and force change are traits that have served us well over the years.

I could tell from the audience’s reaction that they absolutely got it; that they have the tools, or can get the tools, that are necessary to make a difference.

Six or seven years ago, we realized that input costs to our farm were rising due to the fossil fuel component. I went to the Peak Oil Conference to learn about oil and figure out how we would force change so we could adapt our farm to be relevant in the future.

I learned that the world has been using twice as much oil as it has been finding, and has been doing so for 20 to 30 years. That was clearly not sustainable and we set out to transform our farm. We looked into using the water flowing downstream to generate electricity. Soon we will be completely off the electric grid.

We also downsized our farm, and then made up for the loss of production by leasing land to area farmers. The result is that the productivity of our land has actually increased, and the variety of products has increased as well. Another benefit: It strengthens our community.

I talked about how sun energy gives mainland farmers an edge over Hawai‘i farmers. Long summer days result in high production, and as the production follows the sun around the country, this advantage is kept throughout summer.

But I told the audience that we could get an advantage if we were able to use our natural resources to get cheaper electricity. Quite often folks think that fuel is the highest cost of getting farm-grown food to the table. It is actually the cost of electricity that is more important. Keeping the cold chain from the farm to the home refrigerator is actually more costly than the cost to run the tractors.

When oil is $100 per barrel, which is near today’s price, the cost to make electricity from oil is around 20 cents/kWh. However, the cost to make electricity from geothermal is only about 10 cents/kWh, and it will remain stable.

Lloyds of London warns of $200 per barrel oil by 2013. The cost to generate electricity from that oil will rise to 40 cents/kWh, while geothermal electricity will stay at 10 cents/kWh.

The answer to food and economic security is to force change.

I was struck by people’s reactions to my talk. The way that people expressed their appreciation for what I said makes me think that people are getting very worried for Hawai‘i’s future. I think that people felt hopeful, that common sense was more important to survival than any amount of letters after one’s title.

Geothermal, Peak Oil, Renewable Energy Sources

A Humorous Look at How This Could All Play Out

Sun

Since the start of the industrial revolution, our energy use has grown about 2.9 percent per year. This article says that to keep growing at even 2.3 percent per year beyond 275 years, we would have to put solar panels on every square meter of land.

Considering the sun’s energy seems limitless, what happens if we could maximize its use?

The article, from Energy Bulletin (July 12, 2011), is Part One of a series that tries to bring large concepts into view by using simple estimations to their logical, and sometimes humorous, conclusions.

Galactic-scale energy

by Tom Murphy

…Surely in 275 years we will be smart enough to exceed 20% efficiency for such an important global resource. Let’s laugh in the face of thermodynamic limits and talk of 100% efficiency (yes, we have started the fantasy portion of this journey). This buys us a factor of five, or 70 years. But who needs the oceans? Let’s plaster them with 100% efficient solar panels as well.

Another 55 years. In 400 years, we hit the solar wall at the Earth’s surface. This is significant, because biomass, wind, and hydroelectric generation derive from the sun’s radiation, and fossil fuels represent the Earth’s battery charged by solar energy over millions of years. Only nuclear, geothermal, and tidal processes do not come from sunlight—the latter two of which are inconsequential for this analysis, at a few terawatts apiece…. Read the rest

Plant leaves are mini solar collectors. Can we convert the product of leaves’  work and convert that result into something that yields more usable energy than what the leaves manufactured in the first place? So far, we have not been very successful.

Most of the processes that involve biofuels have a low net energy result — energy-in versus energy-out. In fact, because there are fossil fuel inputs, there is a term that describes the result. It is called the “receding horizon.” The break-even point recedes into the horizon as fossil fuel prices rise.

While I am for using sun energy to help solve Hawai‘i’s food and fuel problem, I am also for emphasizing geothermal energy as a way to give Hawaii a game-changing energy/food/social advantage relative to the rest of the world. This is about positioning future generations for survival and prosperity all at once.

My Pop would say: Find three solutions for every problem and then find one more just in case. Now is the time to implement that special, geothermal solution.

Biofuel, Geothermal, Peak Oil

Defining Terms & Why Oahu’s In Trouble

Base Power: Eighty percent of the feed source (oil, geothermal energy, biofuels) that an electric utility uses to produce electricity must result in what is called “base load” power. Base Load Power is the power that keeps electricity flowing smoothly to customers, so there aren’t rolling blackouts and flickering lights.

Because 80 percent of the utilities’ power must be base load power, one should pay close attention to the cost of that base load power.

Intermittent Power: The other 20 percent, made up mostly of sun power and wind power, is “intermittent power.” Big Wind falls into the 20 percent category.

O‘ahu depends overwhelmingly on oil for its base power. The utility could import biofuels, but biofuels are much more expensive than oil.

The International Energy Association, which represents the “rich” countries of the world, warns that the era of cheap oil is over.

In Jan 2011, the cost to generate electricity from oil was approximately 16 cents per kWh. By June (when oil was close to $100 per barrel) this had increased to 22 cents/kWh.

Barrons and Goldman Sachs predict that oil will cost $150/barrel within two quarters, and so we can guess that the cost to make electricity from oil may be more than 30 cents/kWh.

And Lloyds of London warns of $200 oil by 2013 – so 40 cents/kWh to make electricity? That’s less than two years from now, and almost double what it costs now.

By contrast, electricity from geothermal is estimated to cost around 10 cents/kWh and this would not change much over the years. Jim Kauahikaua, the chief scientist at the Hawaii Volcano Observatory, told me that the Big Island would be over the hot spot that generates geothermal activity for 500,000 to a million years.

Below is one estimation of the world’s future oil supply. In spite of rising prices, world oil supply has not increased since 2004. Keep in mind that we may not have started to drop down the backside of the world oil supply curve – YET.

Oahu is in trouble!

Unconstrained-demand

Geothermal, Iceland, Renewable Energy Sources, Travel

Heading to Iceland

This is Part Two of a series; see Part One here.

Along with Ro Marth, CEO of Kuokoa, I have been invited to go to Iceland.

We want to find out how Iceland went from being a developing country in the 1970s to one of the most productive countries in the world today. With fishing, geothermal and hydro, they have food and fuel in abundance.

From Wikipedia:

While Iceland is a highly developed country, until the 20th century it was among the poorest countries in Western Europe….

In 2007, Iceland was the seventh most productive country in the world per capita (US$54,858), and the fifth most productive by GDP at purchasing power parity ($40,112)…. 

Renewable sources—geothermal and hydropower—provide effectively all of Iceland’s electricity[83] and around 80% of the nation’s total energy,[83] with most of the remainder from imported oil used in transportation and in the fishing fleet.[84][85] Iceland expects to be energy-independent by 2050. Iceland’s largest geothermal power plants are Hellisheiði and Nesjavellir,[86][87] while Kárahnjúkavirkjun is the country’s largest hydroelectric power station.[88]

If it’s true that an increasing energy supply due to oil is mostly responsible for the work that goes into manufacturing things – in other words, the world economy – then declining oil supplies will result in less manufacturing of stuff.

For the last 20 to 30 years, the world has been using twice as much oil as it’s been finding, and this trend will likely continue. Since the world’s oil supply is declining, rather than increasing, we cannot expect to rely on government grants, because governments rely on growth to get their revenues. This raises the question of how Hawaii State and County governments will balance their budgets.

We will have to tax the people who cannot bear the taxes when the economy is not growing. Or we need to grow the economy. Growing the economy is clearly the best alternative. But how?

I’m very interested in seeing what they are doing in Iceland.

Education, Peak Oil

We are Teaching Our Economics Students Wrong

In economics, we teach everyone that Land, Labor and Capital are the elements of production. Along the line, we forgot that energy from cheap oil is what made deploying Capital so important. We started to believe that growth was automatic. And we taught that to millions of students.

The U.S. Department of Education shows 4,861 colleges and universities with 18,248,128 students in 2007. We are teaching these students wrong. Millions of students are being taught that finite resources are not important.

The cover of the July 4th edition of Barron’s magazine says Get Ready for $150 Oil:

…As oil producers’ spare capacity gradually declines to worrisome levels, the average monthly price could reach a record $150 per barrel by next spring, with spikes to $165 or $170. With this, $4.50-a-gallon gasoline will become the norm. That will put a huge dent in consumer wallets, while ramping up the desirability of fuel-efficient cars.

Read the rest

Why is this a surprise?

We’ve known about Peak Oil for at least 20 years. How come our whole country was not warned, so we could be preparing?

Maybe this complex society we have built from cheap oil has become too complex to understand?

To look back: In the 1600s, those who owned lots of land were wealthy. The energy that made things grow was the sun. So the more land you had, the more sun energy was working for you. Makes sense.

Then in the 1700s, we started to use metal tools to produce more food and so we had extra people floating around. We organized the extra people in factories, and with steam engines we produced wealth. Okay, that’s understandable. The Industrial Revolution came about and Labor was an important factor of production. So far, so good.

Then in the mid-1800s we started to use cheap oil, and over the next 150 years we built a very complex society. We needed to keep score and deploy resources and so we described that as Capital. And things became very complex.

So what happens as oil starts to decline? It seems to me that the total amount of work the people of the world can do will also decline. Let’s say that instead of a full four quarts of gas, you are sent out to cut down trees with your chainsaw and only three quarts of gas. You will probably produce fewer logs and be less productive.

Hall_murphy_change-in-gdp

I think that is what we can expect to happen to the world economy.

I truly believe that the social science of economics has lost its way.

This is Part One of a three part discussion. See Part Two here.

Geothermal, Peak Oil, Sustainability

A Quandary At HELCO

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HELCO issued a Request For Information re: geothermal energy this week.

Although in my opinion Hawaiians are overwhelmingly in favor of geothermal, I am finding, as I ask around, that people are conflicted about HELCO’s intentions.

Hawaiian Electric Company (HECO), the parent company that owns Hawaii Electric Light Company (the Big Island’s HELCO) and the Maui Electric Company (MECO), readily acknowledges that it has a duty to protect the interest of its stockholders.

And when the interests of the stockholders and the interests of the people are in conflict, HECO’s loyalty lies with the stockholders.

That is at the heart of the problems they are having on Moloka‘i and Lana‘i. And it’s at the heart of the problems they deal with when facing the unprecedented future of rising oil prices.

Passing the cost and risk of Peak Oil, as a result of decoupling, straight through to the rate payers – the public – is not comforting to the people.

We need a new model here, one that lines up the needs of the people with the needs of the utility. We need a new model that transforms the utility into an economic driver, rather than an economic impediment. A new model that focuses on a better life for future generations.

People are very uncomfortable with the prospect of handing over, to future generations, a diminished life compared to what they had. We must do better.

There are a thousand reasons why no can. We need to find the one reason why CAN!

Geothermal, Peak Oil, Renewable Energy Sources

Video: Renewable Energy Panel Discussion

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Click on the link to watch a 4-minute video with Richard, as well as short videos by the others mentioned below.

VIDEO: Energy Common Sense for Hawaii panel discussion

June 1, 2011

Video by David Corrigan

Respected figures in energy philosophy and industry were given several minutes to express their opinions on the direction Hawaii should be headed at a recent Democratic Party convention in Kona.

A panel of experts and noteworthy advocates for renewable energy spoke to an audience at the Hualalai Academy about two weeks ago.

The panel included farmer and geothermal advocate Richard Ha, Representative Denny Coffman, attorney and Innovations Development Group consultant Mililani Trask, HELCO general manager Jose Dizon, and president of H2 Technologies Guy Toyama.

Read the rest and watch the videos here.

Big Island, Biofuel, Community, Geothermal, Peak Oil

Hawaiian Perspectives in Support of Geothermal

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Over the weekend I was on the panel of a Hilo Community meeting called “Hawaiian Perspectives in Support of Geothermal Development.” It was held at the UH Hilo, and I estimate that about 50 people attended. By far the majority of the folks there were in favor of geothermal development, provided it is done in a pono way.

Flyer2-UH-Hilo-Mtg-5.28.11
Each panel member spoke about his/her area of interest.

IMG_0912

From left to right, this is Wallace Ishibashi, co-chair of the Geothermal Working Group, and member of the Royal Order of Kamehameha; Robert Lindsey, Big Island OHA trustee, Geothermal Working Group member; Mililani Trask, Hawaiian legal rights attorney and consultant to Innovations Development Group. 

I talked from the point of view of a banana farmer who, five years ago, found his operating costs rising, and attended three Peak Oil conferences to learn how to position his business in a future of rising oil prices.

I talked about how there are serious outside forces at work. The world has been using twice as much oil as it has been finding, and has been doing so for the last 20 years. The winds of change will soon be blowing and oil prices will be rising. It is very serious, and we cannot afford to insist on individual agendas. It is no longer about us now; it is about future generations.

There are many ways that we can deal with depleting oil.

HECO’s plan of fueling with biofuels will cause electricity rates to rise. Rising electric rates means that folks on the lowest rungs of the economic ladder will be the first to have their lights shut off.

There are people who advocate small scale, individual solutions to energy independence. This approach will encourage those who are able to leave the grid to do so, and leave the folks that are unable to leave to pay for the grid.

Another, much better, alternative is to bring more geothermal on line. Geothermal is proven technology, clean and lower in cost than other base power solutions. The more geothermal we use, the more we protect ourselves from future oil shocks.

I told the group what I had asked Carl Bonham of the University of Hawaii Economic Research Organization: If we can maximize geothermal as our primary source of base power, will we become relatively more competitive to the rest of the world as oil prices rise? He said yes.

I told the group that we are lucky to have the options that we have, especially geothermal. Very few in the world are as lucky.

In modern Hawaiian history, our economy has taken, taken, taken and the culture has given given given. We are at a unique time now when the economy can give and the culture can receive.

Do we dare dream of prosperity for future generations? I believe that most felt that geothermal was the way to get us there.

There are a thousand reasons why “No can.” We are looking for the one reason why “CAN!”

Biofuel, Geothermal, Renewable Energy Sources

Mopping the Deck of the Titanic

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In October 2008, the Hawai‘i Clean Energy Initiative (HCEI) – which aims for 70 percent of the State’s energy needs to be met by renewable energy by 2030 – was outstanding for its ambitious approach to the challenges facing Hawai‘i’s future. It anticipates a 30 percent reduction in oil dependency through efficiency improvements, plus a 2 percent/year reduction in fossil fuels over 20 years.

Now we are realizing that 40 percent less oil dependency in 20 years is not ambitious enough. And as we move to implementation, we are finding that some of our assumptions may not work out as planned. A key question is whether or not we are flexible enough to react to the rapid changes taking place.

It is clear to me that we are furiously sweeping and mopping the deck of the Titanic.

Picture 7

 

 

 

 

 

 

 

 

The Hawai‘i Clean Energy Initiative was enacted into law in April 2010. But by then, the world oil supply situation was changing rapidly. Two months later, Lloyd’s of London advised its business clients to be prepared for $200/barrel oil by the year 2013. Economists at the University of Hawai‘i Economic Research Organization told me that $200/barrel oil would devastate our tourist industry.

I asked, “Is it fair to say that if we used geothermal as our primary base power, Hawai‘i would become relatively more competitive to the rest of the world as the price of oil rises?” The answer was “yes.”

In a report last week, the Economic Research Organization at the University of Hawai‘I (UHERO) pointed out that the State’s current weak recovery is being fueled by the tourism industry—which is dependent on future oil prices.

Hawaii has liquid fuel, transportation and electricity problems. The mainland fixed its liquid fuel electricity problem, after the oil shocks of the 1970s, by switching to natural gas and coal.

This past October, when I attended a Peak Oil conference in Washington D.C., they pointed out that the U.S. mainland is less than 9 percent dependent on petroleum oil. A large part of that 9 percent, they then said, was due to the Hawaiian Electric Company (HECO) in Hawai‘i. I was shocked!

To think that we have done nothing about this for the last 20 years. And now we hear the excuse that, since nothing has been done, it will take 10 years to ramp up geothermal, so we cannot wait for geothermal.

Here is a comparison of Energy Return on Investment (EROI) for fossil fuels: In the 1930s, to get 100 barrels of oil, it took the energy of just one barrel. In the 1970s, one barrel would get you 30 barrels. Now, the average EROI is that one barrel will get you 10. Clearly, the trend is not good.

The ratio for geothermal is also around 10 to 1. The difference, though, is that this ratio will not decline for a very long time. Jim Kauahikaua, Scientist-in-Charge of the Hawaii Volcano Observatory, told me that the Big Island will be over the hot spot for 500,000 to a million years.

Instead of fossil fuel, HECO wants to use biofuels to generate the electricity for most of its base power. The problem is that the EROI for biofuels is close to 1 to 1. And it should also be a warning that SunFuels, a company that actually knows about green diesel, is closing up shop in Hawai‘i. Not to mention that farmers knew three years ago that they would not grow biofuels, because it was obviously a money loser for them.

I am not against biofuels, but I think if we are to grow liquid fuel it should be used for jet fuel or transportation fuel—not electricity. I support biofuels through Pacific Bioldiesel. These folks use waste oil to support their capital costs. To the extent they can integrate feedstock from farmers, I think that their model has a reasonable chance of success. I also support UH Hilo’s College of Agriculture and Forestry’s initiative to study palm oil cultivation. This, too, is proven technology.

Geothermal is cheap, proven, gives off no carbon emissions and occupies a very small footprint. And through the generation of NH3 from its off peak power, which can fuel internal combustion engines, geothermal can put future generations into a position so they can win.

NH3 can also help with food security. Eighty percent of NH3’s present use is as fertilizer.

Furthermore, electricity generated from geothermal to power electric cars is clean and cheap.

So geothermal both takes care of us today and can take care of future generations. To farmers, this is not rocket science. It’s just common sense.

We can and must use every renewable energy option available to us, and to its maximum potential. By diverting excess electricity production to alternatives such as NH3 (ammonia), geothermal offers a safety valve that can allow more renewable energy in.

Can we imagine prosperity, instead of doom and gloom? Not, no can. CAN!

The Hawaii Clean Energy Initiative:

On October 20, 2008, an Energy Agreement was signed by the State of Hawai’i, the Hawaiian Electric Companies, and the State Consumer Advocate to accelerate the accomplishment of Hawai’i’s energy objectives in the regulated electric utility sector.

In April, 2010, the Hawaii Clean Energy Initiative Program was added to State law, in Chapter 196 of the Hawaii Revised Statutes.

The Challenge

Hawai’i relies on imported petroleum for nearly 90% of its primary energy

Up to $7 billion flows out of the state annually to meet Hawai’i’s energy needs

Hawai’i’s economy is extremely vulnerable to fluctuations in global oil prices

Hawai’i residents pay among the nation’s highest prices for electricity and fuel

The Solution

The Hawai’i Clean Energy Initiative is helping transform Hawai’i from the most fossil-fuel dependent state in the nation to one run on Hawai’i Powered clean energy within a generation

Its goals and objectives:

Hawaii is the most fossil fuel dependent state in the nation.

This can be explained in large part because of our dependence on tourism and the military – together, they make up roughly 50% of our total economy. That’s a dangerous scenario for the future because of the finite nature of fossil fuel and the fact that our state is more and more vulnerable to fluctuations in oil prices and availability.