Tag Archives: Price of Electricity

Current Affairs, Geothermal, Peak Oil, Renewable Energy Sources, Sustainability

Aren’t the Falling Oil Prices Great?

December 8, 2014 Richard Ha 1 Comment

Richard Ha writes:

Isn’t it great that the price of oil has dropped so low all of the sudden?!

Wait – is it??

In the short term, for maybe five years, we’re going to be pretty happy here in Hawai‘i. More tourists will travel here, food and electricity costs will drop, and we will have more consumer confidence. We’ll feel like everything’s fine.

But everything is interconnected in our big world now, and could there be any problems with such a sudden and steep drop in oil prices?

Gail Tverberg, the former insurance actuary I sometimes refer to here who is very knowledgeable about such things on a macro level – and who writes the blog Our Finite World – just wrote about this.

In her post Ten Reasons Why a Severe Drop in Oil Prices is a Problem, she writes about the big picture.

From Our Finite World:

Let me explain some of the issues:

Issue 1. If the price of oil is too low, it will simply be left in the ground.

The world badly needs oil for many purposes: to power its cars, to plant it[s] fields, to operate its oil-powered irrigation pumps, and to act as a raw material for making many kinds of products, including medicines and fabrics….

Issue 2. The drop in oil prices is already having an impact on shale extraction and offshore drilling.

While many claims have been made that US shale drilling can be profitable at low prices, actions speak louder than words. (The problem may be a cash flow problem rather than profitability, but either problem cuts off drilling.) Reuters indicates that new oil and gas well permits tumbled by 40% in November…

…

Issue 4. Low oil prices tend to cause debt defaults that have wide ranging consequences. If defaults become widespread, they could affect bank deposits and international trade.

With low oil prices, it becomes much more difficult for shale drillers to pay back the loans they have taken out. Cash flow is much lower, and interest rates on new loans are likely much higher. The huge amount of debt that shale drillers have taken on suddenly becomes at-risk. Energy debt currently accounts for 16% of the US junk bond market, so the amount at risk is substantial.

Dropping oil prices affect international debt as well. The value of Venezuelan bonds recently fell to 51 cents on the dollar, because of the high default risk with low oil prices. Russia’s Rosneft is also reported to be having difficulty with its loans….

Tverberg writes about some pretty extreme consequences of nearing the limits of our finite resources. I’ve said many times that I cannot disagree with her. My approach, though, is to look for workarounds for us here in Hawai‘i.

I’ve also said plenty of times that we are so lucky to have geothermal. It’s not quite “infinite,” but the Big Island will be over the geothermal “hot spot” for 500,000 to a million years, and that’s close enough.

We’ll see where all this takes us. It’s uncharted waters. On the state level, it will be good for us in the short term, but on a higher level – where Gail Tverberg operates and what she writes about – we need to pay serious attention to what’s going on. Have a look at her post. It’s important and enlightening.

It’s been a very interesting week in terms of energy and other issues affecting the Big Island and all the rest of it. Stay tuned. I have more to say!

Lowering Electric Rates

A Real Danger: The Rising Cost of Food

May 19, 2014 Richard Ha

Richard Ha writes:

The rising cost of food is a real and present danger.

Last month the price of meat in the U.S. rose at the fastest rate in ten years.

The cost of shrimp is up 61 percent from a year ago.

It’s predicted that pork production may be down ten percent this year, due to a widespread virus, and the cost is already up 13 percent this year.

As all these costs go up, many people have turned to eating chicken, but even the price of chicken breast is up 12 percent since a year ago.

Right here on the Big Island, our Pahoa school complex has the highest percentage of students in the entire state participating in the free/subsidized school lunch program. EIGHTY-NINE percent of the students in the Pahoa school complex qualify for, and receive, free or subsidized lunches.

There are socioeconomic consequences to all of this, and it’s exactly why the Big Island Community Coalition is advocating so strongly for lower electricity prices, which will directly lead to lower food costs.

From peakoil.com:

As the price of meat continues to skyrocket, will it soon be considered a “luxury item” for most American families? This week we learned that the price of meat in the United States rose at the fastest pace in more than 10 years last month….

The price of beef has also moved to unprecedented heights. Thanks to the crippling drought that never seems to end in the western half of the nation, the size of the U.S. cattle herd has been declining for seven years in a row, and it is now the smallest that is has been since 1951….

And we already have tens of millions of people in this country that are struggling to feed themselves. If you doubt this, please see my previous article entitled “Epidemic Of Hunger: New Report Says 49 Million Americans Are Dealing With Food Insecurity.”

So what happens if drought, diseases and plagues continue to cause food production in this country to plummet?

Read the rest

Government, Lowering Electric Rates

Farmer: “I’m Tired of Defending My Life’s Work”

May 15, 2013 Richard Ha 2 Comments

Richard Ha writes:

Yesterday I testified before the Hawai‘i County Council. I was testifying against Act 79, which would prohibit GMOs not already growing on the Big Island.

Note: We do not grow any GMO on our farm.

But the point I was wanting to make is that farming used to be an honorable profession where you could make a living. Now farmers are losing money right and left, wondering whether they will continue to farm, and they are not encouraging their children to do so.

If we farmers are going to survive, we are going to need access to the most modern techniques and technologies. This Act would cut off our ability to use modified crops that are resistent to disease, if needed. It would mean foregoing potential help, like when the banana industry faced a virus 15 years ago. At that time, they started working on genetically modified techniques that would have helped the banana industry greatly, though ultimately it didn’t happen.

Genetic modification also saved the papaya industry here in Hawai‘i; without the Rainbow papaya, we would no longer have a papaya industry at all.

Jason Moniz also testified yesterday. He was representing the Hamakua Farm Bureau and requested the bill be killed, saying it threatens the “well-being” of farmers and ranchers.

“Frankly, I’m sick and tired of having to defend my life’s work,” he said.

This feeling is increasingly being discussed at dinner tables in the farming community. They are asking themselves, “Is it worth it” to continue farming?

What will happen when all our farmers get out of the business?

My testimony:

My name is Richard Ha, and I’m representing Hamakua Springs
Country Farms.

Hamakua Springs Country Farms is a 600-acre, fee simple,
diversified Ag farm. We have produced multi-millions of pounds of fruits and vegetables over the years. We have 70 workers who work with us and have more than 30 years of experience in producing food

1. Farmers are being pitted against each other. This is not good. We need all farmers to help provide food for an uncertain future.

2. Farmers have been losing ground, not gaining ground. Even if you give farmers free rent, it is not guaranteed that they will make money. A UHERO report shows that ag, as a percentage of GDP, has been steadily declining. Food security depends on farmers farming. If the farmers made money, they would farm.

3. Farmers are right now making plans to quit and sell their lands. They cannot tell their children with a clear conscience to carry on, when all they see is conflict and no support.

Here is a solution. Cheaper electricity can give us a competitive edge. The mainland uses oil for only two percent of its electricity
generation. We use it for more than 70 percent. That is why farmers have a hard time doing value-added. Any food manufactured on the mainland with electricity embedded in it has a competitive edge over us.

Seventy nine percent of the students at the Pahoa School complex take advantage of the free/reduced lunch program, and qualification is determined by family income. That means the Pahoa area has the lowest family income in the state! Pahoa is number one in the state. Ka‘u is second, and Kea‘au is third.

Our electricity rates have been higher than Oahu’s for as long as anyone can remember. That means less of our education dollar is going to actually teaching Big Island students. Yet, education is the best predictor of family income.

If we could lower and stabilize our electricity cost, farmers,
distributors and retailers would have lower refrigeration costs. Food costs would go down. Farmers could manufacture value-added food products and increase their income stream. Lower cost electricity means people would have extra spending money to support local farmers. More of our education dollar would go to kids’ education, thereby increasing his/her chance of gaining a higher family income.

Two-thirds of the economy is made of consumer spending. If the people had extra money, they would spend it. Businesses would benefit and there would be more jobs.

There is no free lunch. Let’s concentrate on finding out where we can give ourselves a competitive advantage and go do it. We need to look at the bigger picture. Not “no can.” CAN!

Biofuel, Lowering Electric Rates

My Star-Advertiser Op-Ed: Big Island Biofuels Project Would Raise Oahu’s Electric Rates

May 1, 2013 Richard Ha 1 Comment

My Op-Ed article on the Aina Koa Pono situation, and how it would raise electricity rates for O’ahu residents (though the project is on the Big Island), ran in yesterday’s Star-Advertiser. Here it is in full:

***

The Public Utilities Commission (PUC) is considering approving
a contract between Hawai‘i Island’s HECO-owned utility (HELCO) and a partnership known as Aina Koa Pono (AKP). Its decision is expected within the next several weeks.

Why should rate payers on O‘ahu care about this proposed
contract?

Because if approved, O‘ahu residents would pay about 90
percent of the cost – even though the very expensive fuel would only be used on the Big Island.

The contract between HELCO and AKP calls for HELCO (and you) to purchase fuel from AKP at about $200/barrel. Today, a barrel of oil costs about half that: $107. If this contract is approved, there will be a surcharge, to cover the difference, on your monthly electricity bill.

Furthermore, note that whenever oil has reached about $120/barrel, world economies have slowed precipitously. Many have gone into recession. This tells us that there is a natural economic “stop” in place that keeps oil from getting anywhere near $200/barrel.

And yet HELCO/HECO is trying to guarantee AKP a fixed price
of $200/barrel.

While a discussion of using renewable energy, rather than
primarily buying foreign oil, is warranted, when the cost of those renewables is so unrealistically high that any buyer would look for other alternatives, then that discussion has reached the point of absurdity.

What lower-cost alternatives exist for the Island of Hawai‘i?

The Island has significant geothermal resources at the equivalent price of $57/barrel. Right now, HELCO purchases only about 70 percent of the geothermal power available, meaning there is more geothermal available at well below the equivalent of $200/barrel.
HELCO currently purchases power from biofuel and hydroelectric sources that make a reasonable profit at today’s prices, and don’t ask for $200/barrel. Additional power plants are asking to come on line at today’s prices.
HECO and HELCO currently buy solar power at prices well below the equivalent of $200/barrel (in fact, from what we can tell, at less than half that price).
HECO and HELCO buy wind-generated power for far less than $200/barrel, with more potential sellers lining up to sell to them.

AKP’s plan has technical issues, as well. The process AKP plans to use has never been proven at the scale they propose; the proposed
yield of source material is many times more than ever grown anywhere. There are also cultural and environmental issues.

Finally, you might ask why O‘ahu rate payers should pay for power consumed by rate payers on another island. GOOD QUESTION.

The simple answer is that if rate payers on the Island of
Hawai‘i had to bear the burden, there is no way this could be approved. That kind of tells the whole story right there, doesn’t it?

We suggest you write to the PUC if you oppose this contract:
hawaii.puc@hawaii.gov. You can also contact your State and County legislators and your Mayor.

Richard Ha, owner of Hamakua Springs Country Farms,
submitted this on behalf of the Big Island Community Coalition, of which he is a founding member. Other founding members include Dave DeLuz Jr., John E.K. Dill, Rockne Freitas, Wallace Ishibashi, Ku‘ulei Kealoha Cooper, Noelani Kalipi, Ka‘iu Kimura, Robert Lindsey, H.M. “Monty” Richards, Marcia Sakai, Lehua Veincent and Bill Walter. All operate as individuals and do not represent others. The Big Island Community Coalition (BICC) works primarily with cost issues on the Island of Hawai‘i, where residents pay about 25 percent more for electricity than do O‘ahu rate payers.

###

Big Island, Biofuel, Community, Lowering Electric Rates, Renewable Energy Sources

A Modern Day ‘Avoided Cost’ Contract. What?!

November 30, 2012 Richard Ha

Richard Ha writes:

Dr. Jim Kennedy, a friend of mine, is a respected member of the astronomy community and a tireless supoorter of the community at large. Below is the testimony he sent to the PUC.

Today is the last day the PUC is accepting testimony re: the proposed Aina Koa Pono biofuels project and HELCO 4. percent rate increase. Email your thoughts today to hawaii.puc@hawaii.gov.

Click to read Jim Kennedy’s letter.

Page 1:

Page 2:

Big Island, Community, Peak Oil, Philippines, Renewable Energy Sources

Kenoi Can Guide Big Island into Uncharted Future

October 3, 2012 Richard Ha

Richard Ha writes:

Big Island Mayor Billy Kenoi has consistently made the point that in this changing world, we, too, must change. He pointed that out again recently: That our highest-in-the-nation electricity cost – which is 25 percent higher than O‘ahu’s – is too heavy a burden for the Big Island’s people to bear. To help the most defenseless among us, as well as our local businesses, we need lower cost renewable electricity; not higher cost electricity.

The mayor has consistently been in favor of finding lower cost alternatives to the status quo (which is, of course, dependency on
expensive fossil fuels). The Geothermal Working Group, co chaired by Wally Ishibashi and me and authorized by the Hawai‘i State Legislature, could not have carried out its work without the mayor’s backing. It was an unfunded mandate implemented by volunteers. The mayor just told his people, “Make sure they have what they need.”

Mayor Kenoi is a quick learner; one who gets both the big picture and the small one.

He led a delegation to Ormoc City, Philippines to see how 700 MW of geothermal energy was developed in a place with a population size similar to the Big Island. I was on that trip and saw how the Philippines is way ahead of us in assessing and utilizing its resource. It’s a great credit to Filipino leaders that, as the Philippines incorporates more geothermal into its grid, the country will be very well-positioned to cope in a world of rising oil
prices.

The Philippines produces a large percentage of the food its people eat, too, as compared to Hawai‘i. Our trip also resulted in a university-to-university relationship.

It’s not that geothermal is the only solution. But because we have geothermal here on the Big Island, that fact-finding trip was a responsible thing to do. That was a very practical, useful and cost effective trip Billy led.

Sitting in the middle of the Pacific Ocean, Hawai‘i is vulnerable to events out of its control, and is sailing into uncharted waters. It’s similar to when our early predecessors sailed up from the south to find a better life.

Who can I see leading today’s expedition that carries the Big Island to a better tomorrow?

I see Billy Kenoi as that leader.