Tag Archives: Gail Tverberg

Nate Hagens on What’s Coming Re: Energy, Jan 12

I helped arrange for Nate Hagens, a well-known speaker on “big picture” issues facing human society, to speak at UH Hilo on Tuesday, January 12th. He’ll be at UCB 100 at 6:30 p.m. His talk will be about how we can cope. Here is a short preview of what he will discuss:

I want to share an article of mine that ran in the Huffington Post last April. It’s about the people I turn to regarding energy issues, and they remain the same.

Before I rerun it for you here, I’ll add that the fracking revolution, which no one saw coming, caused the oil price to plummet a year ago. But as Robert Rapier points out,  we are very close to the bottom of the oil cycle, and we are likely going to repeat the cycle.

And here is that look back at the Huffington Post article (4/1/2014):

The People I Turn to Re: Energy Issues

It is clear to me that the most important issue we face here on the Big Island right now is that of energy costs. There is a huge risk associated with the rising price of oil, it’s going to affect us all, and we don’t have the luxury of time to deal with it. We need to figure it out now.

We have resources here and ways to address this. It’s not rocket science. It’s all a matter of cost and common sense. What I find is that the rubbah slippah folks get it quickly.

It comes down to a matter of attitude. Instead of being the people who look for a thousand ways why, “No can!” we must become people who look for the one reason why “CAN!!”

Energy issues are completely interconnected with agriculture — together, they all lead to our food security, or lack thereof — and I appreciate all the supportive testimony from so many people re: my renomination to the state Board of Agriculture. Here is a full list of the testimony, which includes support from some of the very knowledgeable people I turn to to learn about and confirm information about energy issues.

If it sounds like I know what I am talking about re: energy, it is because I have spent a lot of time at conferences and also learning from these experts, whose testimony you can read at that link above:

#7 Mayor Billy Kenoi. Mayor Kenoi recognized early on that geothermal would play a crucial role in our energy future and that’s why he helped the Geothermal Working Group, authorized by SCR 99, accomplish its work. I was part of a delegation he took to see geothermal operations at Ormoc City, Philippines. We visited a geothermal plant sited on the flanks of a volcano that last erupted 100,000 years ago. (In comparison, Mauna Kea last erupted 4,000 years ago and so is likely an even hotter spot for geothermal.) The mayor also formed a task force to evaluate the health effects of geothermal on the community.

#204 Henk Rogers. Henk is founder of the Blue Planet Foundation and understands and appreciates the potential of geothermal base power energy. He operates his own grid at Pu’uwa’awa’a Ranch. He also has a fully functional hydrogen refueling station on site. Hydrogen fuel cell cars are coming to the Big Island. Henk is a doer more than a talker. When he does talk, it’s likely to be with the King of Bhutan or Sir Richard Branson about energy issues.

#89 TJ Glauthier has operated at the highest level of our national government. He was second in command in the Department of Energy in the Clinton Administration. His list of accomplishments is so long that when I introduced him to the senior assets managers at Kamehameha Schools, I did it like this: TJ has an extremely long list of accomplishments but let me just describe him this way: He is a “good guy.” That’s all I needed to say. Here in Hawai’i, we all know what that means. He is a good friend and we are in constant contact.

#257 Robert RapierLike Mayor Kenoi, Robert Rapier is a “scrappah.” His was the lone voice that opposed Vinod Khosla’s biofuel projects because the net energy did not add up. Several hundred million dollars of subsidies later, Robert proved to be right. He knows his stuff. He has actually operated industrial-scale chemical plants, and yet he can explain scientific concepts in a way that is easy for the layman to understand. I can call him at all times of the day or on weekends. We have become good friends.

#82 Nate Hagens. Nate was editor of The Oil Drum blog, where academics, oil industry professionals and investors came to see what was new. If you participated, you had better know what you were talking about. These folks did not suffer fools lightly. The Oil Drum did not stop publishing because Peak Oil was dead; I think it stopped because we know all we need to know. Now it’s time to do something about it.

Charlie Hall. (See his testimony at this post.) Charlie Hall is a world-renowned systems ecologist. He does not speak about biology from an individual silo but talks about how it involves energy and its effects on real people. Environmentalists who are not systems-oriented sometimes forget about the effects on people. Charlie is known as the father of modern day Energy Return on Investment (EROI). I helped arrange lectures for him to speak at UH Hilo as well as UH Manoa. His wife Myrna, Charlie and myself have become good friends.

#84 Gail Tverberg. Gail is a former insurance actuary whose job was to price risk. She has a stark view of the future. Although I cannot find fault with her view of things,  I am the eternal optimist and spend my time looking for workarounds. Gail wrote in support of our Big Island Community Coalition’s efforts to lower electricity rates. (As it turned out, we were successful in defeating the Aina Koa Pono biofuel project, which would have cut off options for lowering our electricity rates.) I helped bring Gail to Hilo for a presentation at the Hilo Hawaiian Hotel and spent a whole weekend taking her family around the Big Island. I asked her a million questions.

I wrote this in November, and it’s still true. From Let’s Adapt to Change and Survive: “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.”

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Diagnosing Our Electricity Situation

This blog post by Gail Tverberg, Our Electricity Problem: Getting the Diagnosis Right, clearly explains what is going on in the world today and makes it easy to understand some things that seem counterintuitive at first glance.

She write about the oil price drop, and, recently, the economic slowdown. That’s the counterintuitive bit – you’d think with the drop in the price of oil, the economy would be picking up.

I have followed Gail’s analyses for a long time now. What she explains in this blog post is something she’s been predicting, and talking about, for quite awhile.

And here’s the thing – she’s been right on the mark for as long as I’ve known her. She is more doom and gloom about it than I am, but then I have never been able to prove her wrong. So it’s best to be prudent and try to protect ourselves as much as we can.

It’s why I’m pushing the utility co-op. An investor-owned electricity utility would just take us farther down the same old path in the wrong direction.

With a co-op, we are in control of our direction and our destiny. We would manage it ourselves; it would not be managed by people whose end goal was trying to make a dollar for investors. This is what I see as the basic difference between the NextEra plan and ours, and it’s a huge one.

We need to control our direction in order to take care of ourselves, and even more importantly so our kids and grandkids and their grandkids will be able to adapt to changing conditions and take care of themselves. The future is not going to look like, or work like, the past.

Go read Gail’s blog post, where she makes that easy to see. Things are already different, on many levels, and we need to be doing our long-term planning now. It’s like my Pop taught me – we plan for the future by taking small steps now so that later we don’t have to take drastic, catastrophic steps just to survive.

We have to take care of all of us, not just a few of us.

Those survival lessons I learned from my Pop were simple, and it’s time to put them into play.

If Gail’s wrong about how bad it will get, that’s okay. No harm, no foul. But if she’s right, we’ll have done the right thing. Either way, we will have protected ourselves.

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Aren’t the Falling Oil Prices Great?

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! 

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The People I Turn To Re: Energy Issues

Richard Ha writes:

It is clear to me that the most important issue we face here on the Big Island right now is that of energy costs. There is a huge risk associated with the rising price of oil, it’s going to affect us all, and we don’t have the luxury of time to deal with it. We need to figure it out now.

We have resources here and ways to address this. It’s not rocket science.  It’s all a matter of cost and common sense. What I find is that the rubbah slippah folks get it quickly.

It comes down to a matter of attitude. Instead of being the people who look for a thousand ways why, “No can!” we must become people who look for the one reason why “CAN!!”

Energy issues are completely interconnected with agriculture – together, they all lead to our food security, or lack thereof – and I appreciate all the supportive testimony from so many people re: my renomination to the state Board of Agriculture. Here is a full list of the testimony, which includes support from some of the very knowledgeable people I turn to to learn about and confirm information about energy issues.

If it sounds like I know what I am talking about re: energy, it is because I have spent a lot of time at conferences and also learning from these experts, whose testimony you can read at that link above:

#7 Mayor Billy Kenoi. Mayor Kenoi recognized early on that geothermal would play a crucial role in our energy future and that’s why he helped the Geothermal Working Group, authorized by SCR 99, accomplish its work. I was part of a delegation he took to see geothermal operations at Ormoc City, Philippines. We visited a geothermal plant sited on the flanks of a volcano that last erupted 100,000 years ago. (In comparison, Mauna Kea last erupted 4,000 years ago and so is likely an even hotter spot for geothermal.) The mayor also formed a task force to evaluate the health effects of geothermal on the community.

#204 Henk Rogers. Henk is founder of the Blue Planet Foundation and understands and appreciates the potential of geothermal base power energy. He operates his own grid at Pu‘uwa‘awa‘a Ranch. He also has a fully functional hydrogen refueling station on site. Hydrogen fuel cell cars are coming to the Big Island. Henk is a doer more than a talker. When he does talk, it’s likely to be with the King of Bhutan or Sir Richard Branson about energy issues.

#89 TJ Glauthier has operated at the highest level of our national government. He was second in command in the Department of Energy in the Clinton Administration. His list of accomplishments is so long that when I introduced him to the senior assets managers at Kamehameha Schools, I did it like this: TJ has an extremely long list of accomplishments but let me just describe him this way: He is a “good guy.” That’s all I needed to say. Here in Hawai‘i, we all know what that means. He is a good friend and we are in constant contact.

#257 Robert Rapier. Like Mayor Kenoi, Robert Rapier is a “scrappah.” His was the lone voice that opposed Vinod Khosla’s biofuel projects because the net energy did not add up. Several hundred million dollars of subsidies later, Robert proved to be right. He knows his stuff. He has actually operated industrial-scale chemical plants, and yet he can explain scientific concepts in a way that is easy for the layman to understand. I can call him at all times of the day or on weekends. We have become good friends.

#82 Nate Hagens. Nate was editor of The Oil Drum blog, where academics, oil industry professionals and investors came to see what was new. If you participated, you had better know what you were talking about. These folks did not suffer fools lightly. The Oil Drum did not stop publishing because Peak Oil was dead; I think it stopped because we know all we need to know. Now it’s time to do something about it.

Charlie Hall. (See his testimony at this post.) Charlie Hall is a world-renowned systems ecologist. He does not speak about biology from an individual silo but talks about how it involves energy and its effects on real people. Environmentalists who are not systems-oriented sometimes forget about the effects on people. Charlie is known as the father of modern day Energy Return on Investment (EROI). I helped arrange lectures for him to speak at UH Hilo as well as UH Manoa. His wife Myrna, Charlie and myself have become good friends.

#84 Gail Tverberg. Gail is a former insurance actuary whose job was to price risk. She has a stark view of the future. Although I cannot find fault with her view of things,  I am the eternal optimist and spend my time looking for workarounds. Gail wrote in support of our Big Island Community Coalition’s efforts to lower electricity rates. (As it turned out, we were successful in defeating the Aina Koa Pono biofuel project, which would have cut off options for lowering our electricity rates.) I helped bring Gail to Hilo for a presentation at the Hilo Hawaiian Hotel and spent a whole weekend taking her family around the Big Island. I asked her a million questions.

I wrote this in November, and it’s still true. From Let’s Adapt to Change and Survive: “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.”

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A Big Picture Look

Richard Ha writes:

Yesterday I sat in Judge Nakamura’s courtroom full of people both for and against the Thirty Meter Telescope (TMT) being built on Mauna Kea. I looked over at Kealoha Pisciotta, who has led the opposition all these years, and thought about how much I admire her.

As I sat there, I thought back to 2008, when rising oil prices started being such a big concern. At the top of my mind then was finding an economic alternative to tourism and opportunities for keiki education, both of which the TMT will provide. Locating the TMT here is a great opportunity, and I put a lot of effort into supporting it.

As I sat there yesterday, I thought, too, about how the TMT will help the Big Island cope with our rising energy costs and changing economy; because of it, money will flow into our economy instead of out. It will bring 10 years of construction jobs, and $1 million/year toward Big Island student education for each of more than 55 years. More importantly, it will bring to the Big Island an attitude of “Not, No Can. CAN!”

In 2007, I’d met Gail Tverberg at my first Peak Oil conference in Houston. A former insurance actuary whose job was to price insurance risk, she is someone who approaches the world oil supply problem from a risk management perspective. I helped bring her to the Big Island to give presentations, and she observed that our dependence on tourism makes Hawai‘i very vulnerable.

In 2008, shale and gas production hadn’t yet started in earnest. Natural gas prices were very high at $12/thousand cubic feet. According to a USDA analysis, there was an 80 percent correlation of natural gas price to ammonia fertilizer cost, and that had a frightening effect on local farmers. The price of natural gas dropped to $2/mcf, and now it’s around $4.50/mcf. This, coupled with a subsequent increase in natural gas supply, has given us some breathing room. But it’s only temporary.

We have another fairly unique opportunity to protect ourselves against seriously rising energy costs, which are already impacting our lives negatively and will continue to go up if we don’t make changes:

Geothermal energy.

After having attended five Association for the Study conferences (the only person from our state to do so) I’ve found that it’s all a matter of 1) cost, 2) what works and 3) comparative risk.

Geothermal addresses all three of those points. It’s inexpensive compared to using oil to produce our energy; we already know that it works; and after decades of experience with it here, the comparative risk is low.

It also allows the possibility of making hydrogen, which we can use to fuel our ground transportation, and also ammonia fertilizer for farmers. There are a lot of wins there.

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‘La La La La La’

Richard Ha writes:

Farmers and other Ag and business people on the Big Island are in disbelief – to put it mildly – that Mayor Kenoi signed Bill 113, the anti-GMO bill, last week, without first putting together a group to research the science and investigate the serious, unintended consequences we know will result.

But farmers are very practical and play the position that exists on the chessboard, not the position they wish they had. Most of us are moving into strategic contraction mode now.

For example, we had an application in to the USDA to dedicate 264 acres of our farm into agricultural land for perpetuity. We had been going through the vetting process over the last two years and had already been told we were among the top three state projects, as determined by a Department of Land and Natural Resources subcommittee.

I just received a letter Friday asking for more information about our application, with a comment from the Western Region director stating that our project had the highest priority.

I wrote back saying we are withdrawing our application. Nothing personal; just playing the position that now exists. Instead, we will subdivide the property so we have options as we go forward into a future that has some new uncertainties.

If there’s an upside to the mayor signing the bill, it’s that maybe now we will finally take a real look at the current Peak Oil crisis and how it affects the Big Island’s food self-sufficiency situation, and come to grips with finding long-term solutions.

Being open to safe scientific advances when needed (a.k.a. biotech or “GMO”) would have been a way to decrease our dependence on petroleum products, such as pesticides and fertilizers, and increase our island’s food self-sufficiency.

Geothermal energy is another no-brainer that will protect us from rising energy costs. Utilizing geothermal energy – which according to geophysicists will be available to us for at least 500,000 years – we can have stable electricity at an affordable price. As another benefit of geothermal, we can take the currently “curtailed” (collected but unused) electricity and make hydrogen for ground transportation; and by combining it with nitrogen in the air, we can make fertilizer that doesn’t depend on petroleum products and continue to get more and more expensive.

But Senator Ruderman doesn’t see this and wants to kill geothermal energy.

Why? Where is he steering our ship? It feels rudderless.

These are turbulent times. Former Federal Reserve Chairman Alan Greenspan was on CNN yesterday saying that despite dumping money into the economy, businesses are sitting on a lot of cash and not investing, and banks are not lending because it’s too risky. 

He said that the level of uncertainty is like it was during the Great Depression. The next Fed chair will have to manage the interest rate, and too high an interest rate will roil the stock market. He said, “It’s hard to manage psychology.”

I do not see people paying attention to this, so let me extrapolate from what he’s saying: As a result, regular folk are not earning as much money. As a consequence of that, the government will not be able to tax people at a level needed to keep services going, such as maintaining roads (which, of course, requires products made from petroleum).

How far will this go on before we can no long maintain our infrastructure the way we are accustomed to, or take care of our poor people who need help?

What Alan Greenspan is talking about is serious business, and he’s certainly not the only person saying it.

This all boils down to the cost of energy, and how we utilize our resources in a smart and efficient manner.

I’ve gone to five Peak Oil conferences now, and have learned that experts there are all, consistently, saying that the net energy available to society is decreasing as it gets more difficult to get the energy. The consequence of this is less growth, which means less money for the government to perform the services we need to continue living the way we live. Where will the money come from?

Another expert who is highly respected is actury Gail Tverberg. She is as credible as anyone I’ve heard, and she too says it all boils down to the cost of energy. Not availability, nor how much oil still exists, but how much it costs to obtain it – and we all know those costs are only going higher. She writes

Oil and other fossil fuels are unusual materials. Historically, their value to society has been far higher than their cost of extraction. It is the difference between the value to society and their cost of extraction that has helped economies around the world grow. Now, as the cost of oil extraction rises, we see this difference shrinking. As this difference shrinks, the ability of economies to grow is eroding, especially for those countries that depend most heavily on oil–Japan, Europe, and the United States. It should not be surprising if the growth of these countries slows as oil prices rise…. Read the rest

Using GMOs to help leverage our year-round growing season was a workaround, and in my opinion, it was much less risky than what Alan Greenspan, Gail Tverberg and other experts say is coming.

We need to take action and prepare for these changing conditions. If it turns out they were wrong, no harm/no foul. If they are right, using GMO's to avoid petroleum costs in fertilizer and pesticides would have helped us immensely; and using geothermal energy will improve our lifestyle measurably.

Note that I’m not just talking about this – the whole situation scared me enough that we went and put in a hydroelectric system for the farm.

This is not about the sky falling. It’s about common sense. It’s all a matter of how much risk we are willing to take.

We need to decrease our dependence on petroleum, and our energy costs. Rising electricity costs affect the price of our food, and they take away discretionary income from the rubbah slippah folks. Consumer spending makes up two-thirds of our economy.

It’s foolish for us to put our thumbs in our ears and our fingers over our eyes and sing, “La la la la la,” but that’s what seems to be going on around here. 

We’d better have a clear-headed discussion about our future.

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Let’s Adapt To Change, And Survive/Thrive

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.

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Our Plan to Lower Electric Bills, Validated

Richard Ha writes:

If you signed up on the website with the Big Island Community Coalition, you recently received the following email from us.

Gail Tverberg received it and she emailed me this:

Thanks! Good for you!
The message about getting lower cost electricity is exactly right. It is hard to be very competitive (except maybe at tourism) with very high energy costs.

It’s hard for me to express how respected a position Gail holds in the world of energy commentary. She is very knowledgeable, highly respected and she holds the starkest possible view.

I look at what she has to say as, “Okay, that’s the worst case possible, and let’s figure out a way around it.” What she emailed me validates our “work-around.” It’s an extremely important validation.

From the Big Island Community Coalition:

Aloha Members!

The PUC is holding two hearings this month, one in Hilo on October 29th, 6:00pm at Hilo High Cafeteria, and the other on October 30th, 6:00pm at Kealakehe High School Cafeteria. They want to hear YOU. Bring your kids, bring the kupuna, and bring your friends. Tell the PUC how rising electricity rates are affecting you and your family. We do not have to accept these rate hikes.

Rising electricity rates act like a giant tax that hurts the most defenseless among us. Seniors on fixed income, single moms, renters, working homeless, and businesses are all hurt by rising electricity rates. Just last month, it was reported that two houses burned down from using candles. One household was using candles for light because they could not afford the electricity bill.

The Big Island has had electricity rates 25% higher than Oahu for as long as anyone can remember. If we were successful in getting the Big Island electricity rate lowest in the state, we would be able to grow and sell more products on Oahu. There would be more jobs here on the Big Island. Instead of leaving for the mainland to find jobs, our children would be able to stay here and work.

If we were successful in getting locally-produced, lower-cost electricity, our school budget would not rise by 25% every two and a half years. That saving would go toward your child’s education instead of oil from a foreign country.

Already your actions are starting to get results. Just a short time ago, no one could imagine talking about lowering electricity rates. But because of the actions of the Big Island Community Coalition, HELCO is running full page ads in the newspaper. They are now focusing on how they can lower your electricity rates. If you show up in large numbers at the PUC hearings, you can change the thinking of the state government as well.

At the last PUC hearing the participants were mostly from Ka’u. This time folks from Ka’u, Kona, Kohala, Puna, Hilo, Waimea — the whole island, will be represented. At the last PUC hearing, the Consumer Advocate was in favor of ‘Aina Koa Pono, dismissing the opposition as NIMBYism. This time when you all show up from all parts of the Big Island, the Consumer Advocate has no choice but to advocate for the consumers — all of us.

    Your beliefs become your thoughts,

    Your thoughts become your words,

    Your words become your actions

    Your actions become your habits,

    Your habits become your values,

    Your values become your destiny.

    – Mahatma Gandhi

When you show up at the PUC hearings in large numbers, your words will become your actions. Then your actions will become your habits — on the way forward, your values will become your destiny. Our values are — taking care of all of us, not just a few of us, for generations to come.

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How has the rising cost of electricity affected you and your family? How would an even higher electricity rate have an impact on your lifestyle? Are you neighbors with the family who spends their evenings by candlelight? We want to know. Every story matters. This issue of costly energy involves all of us. Email us your story to bigislandcc@gmail.com.

Please mark on your calendar the PUC meeting nearest you, and consider attending if you can. Every person in attendance, every story, will make a difference. 

And join us at the Big Island Community Coalition if you haven’t yet. Enter your email address here, and we will send you an occasional newsletter, like the one above, to keep you informed.

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How To Evaluate a Renewable Energy Technology

Richard Ha writes:

Robert Rapier has been in the trenches, fighting hype and misinformation, for a long time.

In this 2006 article, he challenged Vinod Khosla:

Vinod Khosla Debunked

By Robert Rapier

Update: Vinod Khosla and I have discussed his claims. That conversation is documented here.

Who is Vinod Khosla?

When an influential person begins to affect energy policy decisions – decisions that will have a huge impact on all of our lives – we better take a critical look at the claims that person is pushing. You can’t discuss ethanol for long with an ethanol proponent without having them mention the endorsement of Vinod Khosla. If you don’t know who Khosla is, here are a couple of blurbs from his Wikipedia biography:

Vinod Khosla is an Indian American venture capitalist who is considered one of the most successful and influential personalities in Silicon Valley. He was one of the co-founders of Sun Microsystems and became a general partner of the venture capital firm Kleiner, Perkins, Caufield & Byers in 1986. In 2004 he formed Khosla Ventures.

Vinod was featured on Dateline NBC on Sunday, May 7, 2006. He was discussing the practicality of the use of ethanol as a gasoline substitute. He is known to have invested heavily in ethanol companies, in hopes of widespread adoption. He cites Brazil as an example of a country who has totally ended their dependence on foreign oil.

Why Khosla Must be Challenged

I have previously made the case that Khosla’s claims don’t stand up to scrutiny. However, I recently got an e-mail from a reader who had watched a video presentation by Khosla. He had been referred to the video by a blog, where a poster wrote: “this is actually starting to sound like a rational plan to me.”

…In addition, another e-mail recently called my attention to a coast-to-coast road trip being fueled by E85:Kick the Oil Habit Road Trip. In one of the blog entries from the trip, there is a conversation between the driver of the E85 car (Mark Pike), Tom Daschle, and Vinod Khosla. The conversation is archived at:

Sen. Tom Daschle & Vinod Khosla talk Ethanol [ed’s note: this link is no longer active]

I documented my impressions of the exchange at:

RR Critiques the Road Trip

For me, the most disturbing part of the exchange came when Mark Pike said: “If the technology is good enough for Mr. Khosla, it’s good enough for me. I know that guy has done his research, so I trust him. I will leave all of the scientific data and research to him.”

There we come to the crux of the matter: People trust that he knows what he is talking about. The Wikipedia biography says he is “successful and influential.” Make no mistake; he is influencing people in this ethanol debate, including political leaders. Khosla is convincing people that his projections are viable. Yet, are they carefully scrutinizing his claims? No, because they trust him. Yet claims like his, will dampen conservation efforts, and Americans will not be prepared for Peak Oil. After all, Khosla, a guy they trust, says we are going to produce enough ethanol to replace our oil imports….

Robert came under immense pressure for his article because he was going against the conventional wisdom of the day. He was even accused of being an obstructionist. I liked his approach, though, because he is always interested in the greater good.

And at the end of the day, it turns out, Robert was right.

I first became aware of his work when I went to the Peak Oil conference in 2007. Then I missed the 2008 conference, but went to the 2009 conference in Denver. By that time, biofuels were starting to get traction in Hawaii.

We farmers thought the whole idea was iffy because we knew that a barrel of oil weighs over 300 pounds and when oil is $100 per barrel each pound of oil is worth 30-something cents. So if we had to grow four pounds of stuff to get out one pound of liquid, we knew that the most we could earn for the stuff was less than 10 cents per pound. Forget it.

I admired Robert’s tenacity and integrity, and I asked my friend Gail Tverberg if she would introduce us at the Denver conference. She sent him an email and I was amazed to find out that he had moved to Waimea and was sitting in Michael Saalfeld’s office at that moment. I called him and we have become good friends.

Robert writes the Rsquared blog. One of his interesting posts talks about how to do due diligence in order to evaluate a renewable energy technology. At the end of his post, he
suggests asking 10 questions.

Summary

To break this down into a short “cheat sheet,” here is a summary of some important questions that you want to ask. Try to corroborate answers by talking to employees or competitors.

  1. At what scale has the process been actually demonstrated, and is the process currently running?
  2. What is the source of raw materials for the process?
  3. What is being done with the product?
  4. What are the primary energy inputs into the process, and what is the energy balance?
  5. Will there be intermediate scale-up steps before a commercial facility is built?
  6. What are the key assumptions for a commercial facility (e.g., size, cost of production, location)?
  7. What is the presumed source and cost of biomass for a commercial facility?
  8. Has the process been proven on that specific biomass?
  9. What are the patent or patent application numbers relevant to the process?
  10. What prior work is most similar to yours, and who are your perceived competitors?

If you manage to get honest answers to those questions, you will be well on your way to burrowing through the hype to understand the true potential of a process.

This template is very useful, because we can put all proposed projects on an equal footing by comparing answers. It allows one to compare risks. If all a project’s costs are borne by private investors, then no harm/no foul. But if taxpayers or ratepayers are being asked to pay for the project, then one needs to know how much risk the tax/rate payer is assuming.

At the end of the day, the fundamental question is: Are we socializing the risk and capitalizing the return?

If we are going to socialize the risk and capitalize the returns, we cannot let our decisions be based on P.R. They must be based on a systematic analysis of the process.

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Gail Tverberg on the Link Between Energy Consumption, Employment & Recession

Richard Ha writes:

In this article called The Close Tie Between Energy Consumption, Employment, and Recession, from OurFiniteWorld.comGail Tverberg says that our energy use rises and falls with employment numbers, and also that Gross Domestic Product is related to energy use: The cheaper the energy, the more one uses and conversely, the more expensive the energy, the less people use. It’s all about the cost of the energy.

The Close Tie Between Energy Consumption, Employment, and Recession

by Gail Tverberg

Posted on September 17, 2012 

…Since 1982, the number of people employed in the United States has tended to move in a similar pattern to the amount of energy consumed. When one increases (or decreases), the other tends to increase (or decrease)….

I have written recently about the close long-term relationship between energy consumption and economic growth. We know that economic growth is tied to job creation, so it stands to reason that energy consumption would be tied to job growth1. But I will have to admit that I was surprised by the closeness of the relationship for the period shown.

This close relationship is concerning, because if it holds in the future, it suggests that it will be very difficult to reduce energy consumption without a lot of unemployment. It also would seem to suggest that a shortage of energy supplies (as reflected by high prices) can lead to unemployment….

Gail Tverberg’s former career was as an insurance actuary. Her job was about pricing insurance risk. That’s a relevant set of skills to have as we move into the uncertain future.

Here in Hawai‘i, we are very fortunate: We have a robust set of alternative energy workarounds. But we do need to focus on affordable energy and proven technology to help us dodge the economic downturn bullet.

Read Gail’s whole article here.

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