Tag Archives: Price of Oil

Study: Which Sectors of U.S. Economy Will Peak Oil Imperil?

December 4, 2013 Richard Ha

Richard Ha writes:

This is what I’ve been talking about here, over and over again. We are not paying attention to this, and yet it’s the most important concern we are facing in Hawai‘i today.

Bill 113 is just moving chairs around on the deck of the Titanic. The issue is so much bigger:

Researchers from the University of Maryland and a top university in Spain have just done a study, and written about, “which sectors could put the entire U.S. economy at risk when global oil production peaks (‘Peak Oil’). This multi-disciplinary team recommends immediate action by government, private and commercial sectors to reduce the vulnerability of these sectors.”

The study looked at how vulnerable different aspects of the U.S. economy are to the effects of Peak Oil. In the United States, the research concludes, such sectors would include iron mills, chemical and plastic products manufacturing, fertilizer production and air transport.

Here’s the article from the University of Maryland:

UMD Researchers Address Economic Dangers of 'Peak Oil'

October 16, 2013

COLLEGE PARK, Md. – Researchers from the University of Maryland and a leading university in Spain demonstrate in a new study which sectors could put the entire U.S. economy at risk when global oil production peaks ("Peak Oil"). This multi-disciplinary team recommends immediate action by government, private and commercial sectors to reduce the vulnerability of these sectors.

While critics of Peak Oil studies declare that the world has more than enough oil to maintain current national and global standards, these UMD-led researchers say Peak Oil is imminent, if not already here—and is a real threat to national and global economies. Their study is among the first to outline a way of assessing the vulnerabilities of specific economic sectors to this threat, and to identify focal points for action that could strengthen the U.S. economy and make it less vulnerable to disasters.

Their work, "Economic Vulnerability to Peak Oil," appears in Global Environmental Change. Read the rest

It's almost like we are getting ready to launch the canoes from down in the south Pacific, in order to find another island home. That's how significant these threats are.

I wrote the following back in 2007. It’s been six years now and we’re at risk of going backward with taking care of our people and food supplies, not forward!

…I told them I had a nightmare that there would be a big meeting down by the pier one day, where they announce that food supplies were short because the oil supply was short and so we would have to send thousands of people out to discover new land.

I was afraid that they would send all the people with white hair out on the boats to find new land—all the Grandmas and Grandpas and me, but maybe not June.

Grandmas and Grandpas hobbled onto the boats with their canes and their wheelchairs, clutching all their medicines, and everybody gave all of us flower leis, and everyone was saying, “Aloha, Aloha, call us when you find land! Aloha!”

I spoke about where we want to be in five, 10 or 20 years. We know that energy-related costs will be high then. And that we need to provide food for Hawai‘i’s people.

It's as though soon, we’re going to have to go.

But where will we go?

Food Security, Government, Peak Oil, Renewable Energy Sources, Science, Sustainability

Bill 113: It’s Not ‘Who’ Is Right, It’s ‘What’ Is Right

November 27, 2013 Richard Ha

Richard Ha writes:

All of this hullabaloo about Bill 113, the anti-GMO bill – What it’s really about is that we need to take a little more time, so we can be sure we are making good and informed decisions.

It’s not “us against them.” It’s not “GMO against organic.” It isn't “who” is right, so much as it is “what” is right.

It’s significant that a group of farmers and ranchers who, between them, grow 90 percent of the food produced on this island, have banded together to say the same thing: We need to think this through more carefully.

These farmers and ranchers opposed Bill 113 because the bill was rushed and its consequences were not considered. We didn’t take the time to think it all through and come to the best decision for everyone.

Bill 113 looks through a very narrow prism; there is a much bigger picture that is not being considered. We are not taking into account the risk of rising energy prices. We live in the humid subtropics, where there is no winter to kill off bad insects. Our solution has been to use petroleum products to fight them off and also to make fertilizers – but now, the price of oil has skyrocketed and this is becoming unsustainable.

Use solar energy, some say. But solar energy is only sustainable right now because of subsidies, and we cannot expect that subsidies will always be there.

A leaf, though, is also a solar collector, and it’s free. Being able to leverage our sun energy year round – assuming we have a way to control our pests – would make our farming and ranching industry, and our local food production, more than sustainable.

A solid solution to the extensive problems caused by rising oil costs is to use scientific advances. Biotechnology. It’s comparable to how we use iPhones now to replace the big walkie-talkies we used before.

This would help us get off oil, and would also give us the advantage of a year-round growing season, among other benefits. It would help us all.

We need to think through all of this in great detail. All of us need to be open to the fact that our research might prove a certain favorite plan of action unsustainable. If that's the case, we need to move on to the next idea and research that one carefully, getting input from every side.

We need to consider unintended consequences of legislation. We need to slow down, and research, and make carefully informed decisions.

Aquaponics, Big Island, Community, Eating Locally, Family of Farms, Food Security, History, How It All Started, Hydroelectric, Lowering Electric Rates, Peak Oil, Renewable Energy Sources, Sustainability, The New Ahupua‘a, Watercress

The New Ahupuaa, Revisited

November 22, 2013 Richard Ha

Richard Ha writes:

This is a post I wrote back in 2007. I recently reread it and realized it's the same story as what's happening today. It's six years later, and people still don't realize we don't have time to fool around.

I'm going to rerun the post here.

***

October 10, 2007

I spoke at the Hawai‘i Island Food Summit this past weekend, which was attended by Hawaiian cultural people, policy makers, university researchers, farmers, ranchers, and others.

The two-day conference asked the question, “How Can Hawai‘i Feed Itself?”

I felt like a small kid in class with his hand raised: “Call me! Call me!”

I sat on one of the panels, and said that our sustainability philosophy has to do with taking a long-term view of things. We are always moving so we’ll be in the proper position for the environment we anticipate five, 10 and 20 years from now.

I told them I had a nightmare that there would be a big meeting down by the pier one day, where they announce that food supplies were short because the oil supply was short and so we would have to send thousands of people out to discover new land.

I was afraid that they would send all the people with white hair out on the boats to find new land—all the Grandmas and Grandpas and me, but maybe not June.

I spoke about where we want to be in five, 10 or 20 years. We know that energy-related costs will be high then. And that we need to provide food for Hawai‘i’s people.

We call our plan “The New Ahupua‘a.”

In old Hawai‘i, the ahupua‘a was a land division that stretched from the uplands to the sea, and it contained the resources necessary to support its human population—from fish and salt to fertile land for farming and, high up, wood for building, as well as much more.

Our “New Ahupua‘a” uses old knowledge along with modern technology to make the best use of our own land system and resources. We will move forward by looking backward.

• We plan to decouple ourselves from fossil fuel costs by developing a hydroelectric plant, which will allow us to grow various crops not normally grown at our location.

• We are moving toward a “village” concept of farming, and starting to include farmers from the area, who grow things we don’t, to farm with us. This way, the people who work on our farm come from the area around our farm. We will help them with food safety, pest control issues and distribution.

• We are developing a farmers market at our property on the highway, where the farmers who work with us can market their products.

• We will utilize as much of our own resources for fertilizer as possible, by developing a system of aquaponics, etc.

This “New Ahupua‘a” is our general framework for the future. It will allow us to produce more food than we can produce by ourselves. It is a safe strategy, in case the worst scenario happens; if it doesn’t, this plan will not hurt us.

It is a simple strategy. And we are committed to it.

My assessment of how we came to be here and where we need to be in the future is this: In the beginning, one hundred percent of the energy for food came from the sun. The mastodons ate leaves, the saber tooth tiger ate the mastodon and we ate the tiger and everything else.

The earth’s population was related to the amount of food we could gather or catch. And sometimes the food caught and ate us. So there were only so many of us roaming around.

Then some of us started to use horses and mules to help us grow food. As well as the sun, now animals provided some of the energy for cultivating food. We were able to grow more food, and so there were more of us.

About 150 years ago, we discovered oil. With oil we could utilize millions of horsepower to grow food—and we didn’t even need horses. Oil was plentiful and cheap; only about $3/barrel. We used oil to manufacture fertilizer, chemicals and for packaging and transportation.

Food became very, very plentiful and we started going to supermarkets to harvest and hunt for our food. Hunting for our food at the supermarkets was very good—the food did not eat us and now there are many, many, many of us.

But now we are approaching another change to the status quo—a situation being called “Peak Oil.” That’s when half of all the oil in existence is used up. Half the oil will still be left, but it will be increasingly hard to tap. At some point, the demand for oil—by billions and billions of people who cannot wait to get in their car and drive to McDonalds—will exceed the ability to pump that oil.

Food was cheap in the past because oil was cheap. Five years ago, oil was $30/barrel but now it’s over $80/barrel. Now that oil is becoming more and more expensive, food is also going to become much more expensive.

In the beginning the sun provided a hundred percent of the energy and it was free. Today oil is becoming very expensive, but sun energy is still free. The wind, the waves, the water—they are all free here in Hawaii. It’s the oil that is expensive.

For Hamakua Springs, the situation is not complicated at all. We need to use an alternate form of energy to help us grow food!

With alternate energy, we should be able to continue growing food—and maybe local food can be grown cheaper than food that is shipped here from far away.

I told the Food Summit attendees that we farmers need to grow plenty of food so that others can do what they do and so we continue to have a vibrant society. If we don’t plan ahead to provide enough food, and as a consequence every family has to return to farming to feed themselves, it would be a much more limited society. People would not be able to pursue the arts, write books, explore space. We would have way fewer choices – maybe only, “What color malo should I wear today?”

There was a feeling going through the Food Summit’s crowd that we were a part of something very important and very special. What I found different about this conference is that people left feeling that this was just the beginning.

We are going to take action.

***

Big Island, Eating Locally, Food Security, Geothermal, Government, Lowering Electric Rates, Peak Oil, Renewable Energy Sources, Science, Sustainability

Let’s Adapt To Change, And Survive/Thrive

November 5, 2013 Richard Ha

Richard Ha writes:

What we’re doing on the Big Island with Bill 113 is trying to make a law that prohibits us from helping ourselves. It is the exact opposite of what we should be doing.

The biggest problem we face today is at the intersection of energy and agriculture. In a nutshell: As petroleum prices rise, there’s a direct consequence on agriculture and everything that goes into it (fertilizer, chemicals, packing materials, etc.).

We rely on oil here far more than does the U.S. mainland. We generate 78 percent of our electricity from oil, whereas on the mainland, it’s only two percent. As oil prices rise, everything that has electric costs associated with it gets more expensive. We already see this happening.

Our farmers and food producers on this agricultural-based island are becoming less competitive, and our food prices are skyrocketing.

We need to find a way to be more competitive, which will not only keep our farmers and food producers working, and make us more “food secure,” but will also make our food costs go down instead of continuing to increase.

It’s energy and technology that determine agricultural costs, and fortunately we have two ways to solve this big problem:

Energy

We are extremely fortunate here on the Big Island to have a resource that most places don’t have: We have the gift of geothermal energy. Geothermal costs only half as much as oil, and the resource will be stable (we will be over the “hot spot” that makes it possible) for 500,000 years.

If we increase our use of geothermal over the years as the price of oil rises, we will be more competitive with the rest of the world. This will be good for our island’s ag industry and also for our people, who will see prices go down, instead of up.

Agriculture

Biotech solutions generally lower costs. They can help increase production, whether it’s with university-developed solutions that help plants resist diseases and pests, or biotech solutions that allow plants to manufacture their own nitrogen so we don’t have to import fertilizer (which requires electricity to produce and oil to get to Hawai‘i).

Then we will be able to rely on natural sunlight for our primary energy, which gives us a tremendous, and not common, advantage – we can grow crops here all year around. Insects, pests and weeds grow all year around too, though, and biotech can safely help us with those problems so we will become even more sustainable and competitive.

Using geothermal plus appropriate biotech solutions can give us a huge advantage over the rest of the world, and make life better for us here at home, but we don’t have much time. We have to let science and technology prevail so we can move forward, not stagnate nor fall behind, and we have to get on this now.

There is some unwarranted fear about using biotechnology, but know that all the major scientific organizations in the world say foods created with biotechnology are as safe as those created otherwise.

Oil is a finite resource, and its cost will rise. There is no question about this. It’s a predictable consequence of what’s happening now, and this is not just my take on it.

Gail Tverberg, who is an actuary and an expert on Peak Oil, says it’s not the physical oil that’s a problem, but it’s whether or not we can afford it – because, of course, the harder it is to find the oil, the more expensive it becomes. This is what’s happening right now. She predicts that in two years we’ll be in really serious trouble.

Citibank recently put out a report predicting that Saudi Arabia will no longer export oil by year 2030 – only 17 years from now – because they will be using all their oil within their own country. The consequence of this would be rising oil prices, and the effects would be felt much sooner than 2030.

Many, many other reports agree that the price of oil will continue to rise. The whole prospect is pretty scary.

Michael Kumhof of the International Monetary Fund (IMF) says the IMF can’t even model what will happen if oil hits $200/barrel, because that would be entirely uncharted territory.

I have been to five Peak Oil conferences now, which I started attending in order to figure out how to position our farm for the future. In the course of learning about the oil situation, I realized I was the only person from Hawai‘i attending, and realized I needed to share what I was learning here at home.

What I learned is that the world has been using two to three times as much oil as we’ve been finding, and that this trend continues. Over the five years I attended the conferences, we started to hear predictions of when unparalleled high oil prices, the kind the IMF cannot even model, could occur.

It might be two years from now, or it might be 20 years, but it will happen, and it might happen soon. We need to start preparing now.

Charles Darwin said it’s not the strongest nor the smartest who survive, but the ones that can adapt to change. Let’s survive, and more.

Bananas, Food Security, Government, Tomatoes

‘So God Made A Farmer,’ And Now The Hawaii County Council Wants To Make Them Criminals

September 30, 2013 Richard Ha 5 Comments

NOTE: I do not grow any GMO crops, and I do not have any financial or other affiliation to any large seed or other companies that advocate the use of GMOs. My interest in this topic is in finding the right direction for Big Island farming and in being able to feed our future generations.

The Hawai‘i County Council meets again tomorrow regarding the anti-GMO bill.

I sent a letter to the editor of the Hawaii Tribune-Herald and West Hawaii Today asking that we take a sincere look at the big picture.

We need to know what we want for the Big Island, and then formulate a plan to get us there.

We need to leverage our resources so as to provide affordable food to the rubbah slippah folks while also working toward achieving food self-sufficiency for future generations.

We need to identify how we can achieve a competitive advantage over the rest of the world.

We need to realize that the Big Island is young, geologically, compared to the older islands. We do not, therefore, have alluvial plains, which form after many years of erosion. We do not have the conditions that would support industrial-scale agriculture – flat land, a dry climate, strong sun energy, deep soil and irrigation.

The seed companies are not arriving here tomorrow to set up shop. Their tractors make money on the straightaways, and they lose money on the turns. It’s counterintuitive, but in spite of its size, the Big Island is an environment best suited for small farmers, not large one. Let’s not let a fear of industrialization cause us to make decisions that kill off our small farmers.

Margaret Wille has now suggested we do an ad hoc study group as part of the Bill 113 discussion. This is an excellent place to begin. Let’s place Bill 113 on hold while we do a fair and impartial study of how we will get from here to there. Who is right is not as important as what is right.

Kumu Lehua Veincent always asks: “What about the rest?” and that is the key question. How do we come to a solution that takes care of the rubbah slippah folks as well as everybody else?

There are a thousand reasons why, No can. We must find the one reason why, CAN!!

Some of my thoughts about all this:

Q. How is farmers’ morale now that Bill 113 is out there?

A. Big Island farmers are demoralized. Paul Harvey narrated a commercial during the last Super Bowl that said, “And on the eighth day, God looked down on his planned paradise and said, “I need a caretaker.” So God made a farmer.

It’s less than a year later, and now Big Island farmers are at risk of being criminalized.

Q. What do farmers think of Bill 113?

A. They feel it is unfair. They feel that they would not be able to use biotech solutions for insect and disease problems in the future, as will their counterparts on the other islands. They feel they would not be able to compete.

Farmers want to be good stewards of the land, and they are very distressed that they might be forced to use more pesticides than the rest of the state’s farmers.

Q. What biotech solutions are being developed for bananas?

A. Resistance to Race 4 Fusarium wilt, the biggest threat right now to banana farming worldwide, and resistance to Banana Bunchy Top virus. Both are taking place at the University of Hawai‘i right now.

Q. What biotech solutions are being developed for tomatoes right now?

A. Resistance to Tomato Spotted Wilt Virus, which could devastate a tomato farm.

Q. As a relatively large farmer, do you think the big seed companies will come to the Big Island?

A. No. They’d lose money, which is why they are not already here. They need flat land, low humidity, high sunlight, deep soil and irrigation. Because the Big Island is so young geologically, these conditions are very rare here. Big tractors make money on the straightaways and lose money on the turns.

Q. Will Bill 113 increase our island’s food self-sufficiency?

A. No. Food self-sufficiency involves farmers farming. If the farmers make money, the farmers will farm. Bill 113 would make Big Island farmers less competitive. So it would result in less food self-sufficiency.

Q. Would Bill 113 result in less pesticide applications?

A. No. It’s biotech solutions that result in fewer pesticide applications. Big Island farmers would have to use more pesticides as compared to the rest of the State.

Q. What do farmers think of registering GMO farms?

A. They worry that this would make it easy for ecoterrorists to locate them.

Q. Hector Valenzuela suggested that organic farmers seek high-end markets. Would that help provide food for the masses?

A. It won’t. That solution anticipates a niche production for people who can afford high prices.

Q. Can organics provide sufficient affordable food for the masses?

A. No. There is no winter here to kill off bugs and provide an automatic reset. There isn’t sufficient manure for compost to provide the nitrogen fertilizer, which is the basic building block for protein.

Q. How can biotech solutions give Hawai‘i farmers a competitive advantage over the rest of the world?

A. They leverage our Hawaiian sunshine, which allows us to grow food year round. Also, reducing the cost of controlling insects and diseases that thrive in the humid subtropics gives Hawai‘i farmers a competitive advantage over the rest of the world.

Q. Do you think GMOs are safe?

A. Yes. Every major scientific organization in the world has endorsed the use of GMOs. Two trillion meals have been served with no harm done. Hawai‘i seniors have the longest life expectancy in the nation.

Q. Do you think RoundUp is safe?

A. Yes.

Q. Why do you think RoundUp is safe?

A. We know that the herbicides we used 25 years ago were much more toxic. Today, we have the ability to detect minute amounts of chemicals, and we must put things into perspective. One could take a sample of sea water and detect gold. But that doesn’t mean we would invest money in a business to mine gold from the ocean. We farmers have been taught, over and over, that the dose makes the poison. We need to use common sense.

Q. In your 35 years of farming, what do you consider to be the most important trend that will affect our future?

A. The price of oil has quadrupled in the last 10 years, which has caused farmers’ costs to rise. Farmers cannot pass on their costs as efficiently as others can. Farmers are price takers, rather than price makers. Because it is a finite resource, the oil price will steadily rise and food price will steadily rise as well.

But we can leverage our sun resource with new biotech solutions. We can take advantage of our year-round growing season and lower our cost to control pests and diseases and therefore lower the cost of food production. This will increase our Big Island residents’ discretionary spending, which makes up two-thirds of our economy. By doing this, we take care of all of us, not just a few of us.

Q. What do you suggest?

A. Defer Bill 113 and form a committee of stakeholders and experts to focus on Big Island solutions to future food security. It should not be political. It should be a solution that takes care of all of us, not just a few of us.

Aquaponics, Family of Farms, Food Security, Hydroelectric, Lowering Electric Rates, Peak Oil, Renewable Energy Sources, Sustainability, Water

State of the Farm Report

August 15, 2013 Richard Ha 1 Comment

Richard Ha writes:

Yesterday at the farm I had a meeting with all our workers. It was an update on where we have been and where we are going.

Where we’ve been

The price of oil has quadrupled in the last 10 years, and those who could pass on the cost did. Those who could not pass on the cost ended up paying more. Farmers are price takers, not price makers, so farmers’ costs increased more than their prices.

Anticipating higher electricity prices, we lobbied for and passed a law that the Department of Agriculture create a new farm loan program that farmers could use for renewable energy purposes. Then we started to design a hydroelectricity program to stabilize our electricity costs.

Where we are today

The hydroelectricity project is within weeks of completion. With the combination of a farm loan and a grant from the Department of Energy, we will stabilize our electricity price at 40 percent less than we pay today.

The pipe that transports the water appears to me like it will last for more than 100 years. After the loan is paid off, our electricity will be practically free for more than 60 years.

Where we are going

We are taking advantage of our resources – free water and stable electricity costs – by working with area farmers to help each other grow more food.

What kind of food? Responding to consumer demand, we want to
produce food with a wide variety of nutritional content, including protein, via aquaculture.

In order to be sustainable, the feed-based protein must be vegetation-based. And since the building block of protein is nitrogen, we are looking for an adequate nitrogen source. Unused, wasted electricity can be used to make ammonia, which is a nitrogen fertilizer and, like a battery, can be used to store energy.

What does the future
look like?

Other than stable electricity, which would help us, our serious
concern is the anti-GMO Bill 79. It seeks to ban any new biotech solutions to farmers’ problems on the Big Island. The result is that the rest of the counties and the nation would be able to use new tools for more successful farming, and the Big Island would not.

What would happen is that Big Island farmers would become
less competitive, which would put even more pressure on those already at the bottom of the pay scale. It would result in higher food costs, making consumers less able to support local farmers.

The folks pushing for the anti-GMO bill have not talked to farmers, and they have no clue that this bill would make Hawai‘i less food
secure. The bottom line is that food security involves farmers farming. If the farmers make money, the farmers will farm. If not, they will quit.

Articles, Eating Locally, Geothermal, Peak Oil

Agreed: Local Products Shouldn’t Be More Expensive

May 7, 2013 Richard Ha

Richard Ha writes:

Over the weekend, Scott Bosshardt of Kea‘au had an important letter to the editor of the Hawaii Tribune-Herald.

His point was that products produced and purchased locally shouldn’t be more expensive than the same product purchased abroad.

One extremely important fact that the “Think Local, Buy Local” proponents shouldn’t overlook is that local businesses need to “price local.”

Products produced and purchased locally shouldn’t be more expensive than the same product purchased abroad.

He also wrote:

“Price local” instead of as if our Big Island-grown tomatoes and coconuts were imported from half way around the world or some other planet, then people will be much more inclined to “buy local.” This holds true for everything we produce here. Think about it. When you live in Columbia, you don’t pay more for coffee than you do in San Francisco.

He’s right: Prices are higher here, and we need to lower them. It’s what I keep talking about. We need to find a way that we can lower our costs.

I first noticed our farm costs rising steadily back in 2005 and 2006. Rising costs affect every aspect of our farm, and it was very worrisome. Looking into it, I realized that the rise in price was due to the price of oil increasing.

Here in Hawai‘i, we are being squeezed extra hard. More than 70 percent of our electricity comes from oil. Compare this to the U.S. mainland – Hawaii’s primary competitor in many produce and food manufacturing categories – which relies on oil for only about two percent of its electricity generation.

As the price of oil rises, you can see how our local farmers and food manufacturers become less and less competitive with the mainland.

Farming is very energy intensive, and farmers’ refrigeration and water pumping costs have steadily gotten more expensive. Wholesalers’ and retailer refrigeration costs have gone up, too. This means food costs more.

Oil prices have quadrupled in the last 10 years, and this has put the economy into a continuous recession. Everything has been squeezed. Government workers’ pay has been cut. Electricity costs have gone up steadily. School budgets have been squeezed. Medical costs have risen.

I have so far attended five annual Association for the Study of Peak Oil (ASPO) conferences trying to figure out how to protect our farm from the rising price of oil. I don’t have a degree in chemistry or the sciences – but I am a farmer with common sense. So I spent my time figuring out who I can trust for good information

I determined that the folks at ASPO can be trusted because they have no other agenda than to produce good information. It is up to me to decide if their studies are valid or not, or whether I agree with their conclusion. On the other hand, I thought that people whose livelihood depends on putting on a happy face would probably just put on a happy face.

I have learned that the world has been using two to three times as much oil as it has been finding, a trend that continues. I’ve learned that the oil being produced now is much more expensive than what they found 50 years ago. It takes more energy now to get the energy. The cost of producing oil from shale and oil sands was $92 per barrel in 2011, and the floor price of oil is probably not much lower than that.

The era of cheap oil is over. And the stuff produced in the future will be even more costly, setting a higher floor as time goes by. Unless we do something, it will squeeze us all even more.

Look around: It is happening right now, even with a banner tourism year. Imagine what it will be like if we have a significant downturn.

Also important to note is that the rubbah slippah folks have less and less discretionary income. Consumer spending makes up two-thirds of our economy. Our consumers will have more spending money when we can lower the cost of our electricity.

What about the happy news that the U.S. will become the largest producer of oil and gas in the future? In 2009, Art Berman, a petroleum geologist, showed that in a study of 4,000 gas wells in the Barnett Shale, most of the production came out in the first year. Sixteen-thousand wells later, we see that 90 percent of shale gas and shale oil wells were more than 90 percent depleted within five years. And the decline rate for all the wells is more than 30 percent. We will need to drill one third as many we have now just to keep production steady.

One can reasonably conclude that the shale gas and shale oil phenomenon may not be a game changer. It probably won’t make a large dent in world oil production.

Meanwhile, the overall trend continues. Most of the world’s oil is produced by giant and supergiant oil fields, and lots of them are declining. Folks who study this estimate that the decline rate is around 4 to 6 percent annually. That is about 3 million barrels a year. This is going on all day, every day, no matter what the stock market does.

What can we do on the Big Island to lower electricity costs, and the cost of locally produced food? Biomass and geothermal can do that today. There may be other choices maturing in the next few years, too.

Producing electricity from geothermal here costs half as much as producing it from oil. And the Big Island will be over the hot spot that provides us with geothermal for 500,000 to a million years.

Iceland is pulling itself out of the largest financial crash in history because it has cheap electricity from geothermal and can export fish.

Let’s say that one wanted to payoff an oil-fired plant that produces 60MW today. That difference in price would save $6,600/hour and $158,400 /day. This is more than $50 million per year. Seems like we could be creative with writing off stranded assets.

We are very lucky to have these options here.

Our New Hydroelectric System Is Almost Online

April 10, 2013 Richard Ha 1 Comment

Richard Ha writes:

Our new hydroelectric system is almost ready to go.

We received a County permit to put a power line under the single lane County road, and that was finished several weeks ago. All the overhead lines are in place now.

All we need to do is hook up the ends and we will be generating electricity from the river.

Our vision is to use the electricity to help area farmers consolidate and ship their produce to market along with ours.

Our hydro project is an attempt to stabilize farmers’ costs. Farmers and food manufacturers here in Hawai‘i – where we use oil for more than 70 percent of our electricity generation, compared to the Mainland where they use oil to generate only 2 percent of their electricity – are at a disadvantage when it comes to importing food products.

Lots of veteran Big Island farmers are considering selling, instead of passing their farm on to the next generation. The quadrupling of energy costs in the last 10 years had been just too hard for them to adjust to.

Our farm uses approximately 30 kilowatts of electricity, and we will generate more than 70 kilowatts.

We’re asking people for ideas about what to do with the excess electricity. One idea is to cold treat temperate fruit and fool it to think it’s growing in Washington, sort of like what they did at NELHA. I that case, they ran cold water by temperate crops and gave them the cold treatment that way.

Any ideas?

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

Graphic Opposition to Aina Koa Pono & 4.2% HELCO Rate Increase

November 29, 2012 Richard Ha

Richard Ha writes:

More PUC testimony from a Big Island resident opposing the Aina Koa Pono biofuels project and the proposed 4.2 percent HECO rate increase.

See below where he charted the price of crude oil over the past two years, as well as how much his HELCO bill increased over the same period of time, and didn’t find much correlation.

Dear Chair Morita & Commissioners:

I want to express my most sincere opposition both to the Aina Koa Pono Biofuel project and the Helco 4.2% rate hike.

In today’s day and age it is inconceivable that while we are living in one of the most privileged locations on the planet with regards to renewable energy resources availability we still depend on a single utility company that holds a true monopoly on the power generation and that continues to ignore what would be the most efficient path towards energy independence.

South Puna seats on a rich geothermal zone that could provide enough power for the entire Big Island. South Kona & Kohala areas have enough sun radiation to produce a significant supplement to the grid, and South Point and Saddle Road areas provide some of the most reliable wind patterns for wind generation. Yet, here we are debating on whether we should lock in a $200/barrel deal with a biofuel company. Who in its right mind would opt for this option!?

As for the rate hike, the following graph shows my cost per kWh at my home for the past two year (since Jan 2010)

As you can see from the graph, my price has increased from $0.36/kWh to $0.42/kWh, that is a 16.7% increase in just two years. Now they want an additional 4% increase? under what justification? meanwhile, HELCO continues to report record profits year after year.

And do you know what the real kicker is? look at the following graph, that shows the price per barrel of crude oil (WTI) between January 2010 and November 2012 (source: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RWTC&f=D).

Notice any discrepancy between the two graphs? In Jan 2010 the price per barrel of crude oil was $82.00, in November 2012 the price is $87.50 an increase of 6.7%. Helco has increased their rates 2.5 times the net increase of the price of oil, and now they want another increase.

Sincerely,

Rodrigo F.V. Romo, Ch.E., MBA, LEED AP

VP Engineering

Zeta Corporation

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

How Much HECO Is Spending On Those Ads, & More PUC Testimony

November 29, 2012 Richard Ha

Richard Ha writes:

You’ve probably seen the slick newspaper and TV ads. Hawaii Electric Company (HECO) has spent more than half a million dollars recently to convince us they are trying their hardest to do the right thing. The company is very good at public relations.

For example, the ads say HECO has increased geothermal energy on the Big Island by 25 percent. That sounds wonderful – but that is from a base of only 30 MW. It also says that Aina Koa Pono will only result in $1 per month difference to a typical rate payer.

The big picture is that HECO has resisted closing down its oil-fired plants for years. But now, people are saying enough is enough.

Here is another concerned community member’s testimony against Aina Koa Pono and the proposed 4.2 percent rate increase. Send yours to hawaii.puc@hawaii.gov by tomorrow.

To: ‘Hawaii.PUC@hawaii.gov’
Subject: Dockets Docket # 2012-0185 & 2012-0099

Aloha Chair Morita and commissioners:

I am strongly against the AKP biofuel supply contract and the increase in the Helco electricity rates.

I have lived here on the Big Island in Puna, close to Pahoa for the last 14 years and am the owner of a bed & breakfast operation in Leilani Estates. I have a family with two children and two acres of property. If any of the two dockets go through it will increase the cost of doing business for me and infringe on the viability of my operation. The nature of my business requires for electricity to be available to our guests and there are many times, when I cannot control the use of it, because guests staying at my B&B may not be as conscientious in preserving energy as I am: fans, lights, radios or TVs are left on even though the visitors are not in their rooms. In order to cover additional operational cost my only option would be to increase our B&B rates, however, with the current economy this will result in a decrease of bookings, as people traveling always look for bargains and are not willing to pay higher accommodation rates, if they can get a “beat-the-price” online offer for some of the hotels as package deal with much better conditions.

On the Big Island, electricity rates have been 25 percent higher than Oahu’s rate for as long as people can remember. It has contributed to the Big Island having one of the lowest median family incomes in the state and the attendant social problems that come with a struggling economy. As a family this affects our children and the way we are able to give back into the economy and our communities.

Rising electricity rates act like a regressive tax – people at the bottom of the economic ladder suffer the most. But it is worse; as electricity prices rise, folks that can afford to leave the grid will do so, leaving the folks unable to leave to assume more of the grid infrastructure cost. It is a catch 22. For me with my business depending on consistent electricity supply, it would be impossible to leave the grid and I would be directly impacted by the increased rates and future consumer decisions.

1. Aina Koa Pono Biofuel Project – Docket 2012-0185: Rate payers will subsidize the difference between the actual oil price and the $200 that AKP will be guaranteed for 20 years. It is more than possible that actual oil prices would be substantially below $200 for the whole contract period. That will result in a heavy subsidy that rate payers must bear. The $200 per barrel rate is much too high. And the cost differential that is anticipated to be passed through to the rate payer is unconscionable. The PUC should not approve as just and reasonable that the utility should be allowed to establish a Biofuel Surcharge provision that will allow the pass through of the cost differential to the consumer as well as the actual cost pass through itself.

2. HELCO Rate Increase – Docket 2012-0099: HELCO states in its full page newspaper advertisement that only 3% of its revenue goes to profits. In 2011 HELCO reported $138.2 million in net earnings. Most small businesses in Hawaii do not have a 3% profit margin, most net earnings are much lower and that includes my Bed & Breakfast business. Increased electricity rates would narrow this margin even more. I am entirely opposed to an increase in electricity rates. As a business owner it is HELCO’s responsibility to keep the grid in operating condition. This is not the responsibility of the end users nor should we be charged for it. It is a crucial part of the operating expenses and investments in the future, that a business has to strategically make. It is the same for my business, if I let my rooms fall into disrepair or do not invest in new mattresses every few years, people will stop coming. It is in my best interest to make these investments as I am wanting to stay in business. It is the same for a utility company. Not all investments can be directly compensated by increased rates. The market and consumers will only bare so much – and as consumers, we are saying – no more! Profits will go up and down, depending on what investments have to be made – and that is true for all businesses. But as a business owner we all know that these investments are long term and also mean decreases in the company’s corporate taxes. Also, how much do you think the HELCO advertising campaign costs? Without knowing exact figures I am sure it is in the millions. As end consumers, we are paying for that, too! What a waste of good money…

Petra Wiesenbauer

Some of my thoughts about all this:

Where we’ve been

Where we are today

Where we are going

What does the future look like?

What does the future
look like?