Hawaii Energy Cost: Double U.S. Average and Likely to Stay There

Another disadvantageous first for Hawaii, and most of it due to our price of electricity.* We are hooked on oil and the future does not bode well for us because actually it may be cheaper to stay with oil.

Notably crude oil pricing today is at $80. Oil prices may decline further to around $50/barrel (in year 2000 constant dollars) for more than a decade because:

1. China, India and Germany are focusing on coal. Brazil on ethanol.
   
2. The success of fracking and other unconventional methods for extracting natural gas (see below.)
3. The expected reduction in the political turmoil of oil producing countries.
4. The localized success of electric vehicles and the continues improvements in vehicle MPG.
5. The modest introduction of additional large nuclear plants, wind and solar installations.

There is great attention focused on natural gas, worldwide. According to The Economist, August 9, 2011 existing and potential assets (in parentheses) of natural gas for a half dozen countries are as follows, in trillion cubic meters. These are truly vast energy deposits:

• Argentina 0.4 (21.9)
• Australia 3.1 (11.2)
• Canada 1.8 (11.0)
• China 3.0 (36.1)
• Poland 0.2 (5.3)
• USA 7.7 (24.4)

As a result of all these, the likelihood of large price drops in the development of renewable technology is less rosy. This is a major loss for Hawaii which is too tiny to absorb the costs of developing technology.

(*) ENERGY COST INDEX 2011: RANKING THE STATES, August 2011.

Data Sources for the chart with data from SBEC: Gas price index from gas prices provided by the AAA’s website www.fuelgaugereport.com accessed on July 22, 2011, and electricity cost index is an index of state’s average revenue per kilowatt-hour for electricity utilities (data for 2011 through April from the U.S. Energy Information Administration).