Tuesday, March 31, 2009


The US crude oil stockpile is the highest since July 1993 representing over one trillion barrels of oil, when the strategic reserve is included. Some are surprised by the growing stockpile and continue to bet on increased petroleum prices in the future assuming that it is only a matter of time before we resume our old oil usage habits. Though much of the growth in inventory can be attributed to the recession impacting the demand for gasoline and petroleum by-products (like plastics), we believe a confluence of new energy saving technologies may also be lowering the US demand for oil.

1. Smart motors: It is estimated that 40% of all electric usage in the US is used by motors. The last decade has seen huge improvements in the efficiency of electric motors, so it would be easy to think that there is no way to further reduce their energy consumption. But recently a new generation of motors, with micro processors that calculate and control the amount of electric current needed, have come on to the market. Motors keep running even when there is no load; these new smart motors lower the current when there is no or a reduced load. Estimates vary about how much electricity these new motors save, but some state the savings are as high as 40%. This type of technology takes a while to become pervasive, but every piece of equipment and every factory that switches over to these motors lowers the power usage. If 40% of all electric usage is reduced by 40%, it could ultimately save 16% of the US’s overall electricity usage.

2. Natural Gas Extraction: A new technology has recently emerged that uses horizontal wells to extract natural gas from shale deposits in the northeastern US. We have been watching this development in the Marcellus Shale Play (a large geological deposit of shale in Pennsylvania, Ohio and West Virginia) by a small oil and gas producer, RRC. RRC has had great success with horizontal wells drilled into the shale resulting in an increase of natural gas production from 1 million cubic feet per day a couple of years ago to 22 million cubic feet per day from 7 wells as of May of last year. A great benefit of this gas field is that it is close to the major power users on the east coast that have typically depended on imported oil. In some cases, the natural gas is piped directly to East Coast power plants without the requirement of a cross-country pipeline infrastructure. A daily production of 22 million cubic feet of gas replaces the energy equivalent of 3,700 barrels of imported oil a day. RRC is drilling new wells and other producers are also starting to copy horizontal well technology. This increased production from US shale deposits has the potential to completely replace the 1.2 million barrels of oil a day currently being imported from Saudi Arabia.

3. Home Electric Cogeneration: It is becoming popular in parts of the northeast US to install a home cogeneration system, CHP (Combined Heat and Power) system, which simultaneously generates heat and electricity. CHP systems use natural gas to produce electricity which generates heat as a byproduct. This waste heat produced by the generator is used to heat the owner’s house and water. The electricity produced while the generator is running is put out to the power grid; the generator is only run on demand for heat or hot water needed by the house which conserves natural gas. In Western states and here in Hawaii, solar and wind power systems being installed by home owners and businesses have a similar benefit of putting excess electricity generated on to the power grid. Every additional source of power on the grid reduces the need for power companies to burn imported petroleum products to produce electricity.

4. LED lights: Though still in their infancy, LED systems are being installed by cities throughout the US. Street light replacements are the most popular due to their immediate and huge savings; many cities are seeing savings in the millions of dollars in their electric bills the first year. LED lights, which are still expensive for the home, use only 10% of the electricity of incandescent lights for a electricity savings of 90%. Applications of the technology with the most obvious benefit are night lights, specifically street lights, signs, and architectural night lighting. It also has the benefit of being 12V and so is very efficient with 12V solar systems. As the LED market develops the prices will hopefully come down making it more affordable for home use. Lighting accounts for 34% of US's electricity usage, so LED systems could potentially save another 28% of the US’s electricity requirement.

5. Hybrid cars: Hybrids have become almost common place now. Toyota has recently announced that they are adding solar panels to their hybrid cars which could provide up to a 10% increase in mileage if you live in a sunny area. The average US car, a SUV or light truck, gets less than 17 miles per gallon. Hybrids get up to 48 miles per gallon; switching to hybrids could reduce the US’s need for oil by about 7 million barrels a day, or 30% of all US oil consumption and 50% of all US crude oil imports. Those that have added solar panels to their Toyota Pirus have seen an additional 29% increase in miles per gallon; this would reduce oil consumption by an additional 2 million barrels a day!

Although the barrels of oil that these new technologies save today seems small in comparison to the total US petroleum imports, we believe that rapid adoption of these new technologies will vastly reduce the US dependence on imported oil over the next decade. We know that everyone won't be driving a hybrid with solar panels or heating their house with a CHP or solar system next year, but as more and more people do, it will vastly reduce our dependence on imported oil.

Tuesday, March 24, 2009


We spent three days in Kona and West Hawaii last week, which turned out to be good timing due to the wind change sending the vog (volcanic gasses) east to Hilo rather than its normal direction toward Kona. The air was the clearest we have seen in Kona in over a year and the weather was glorious. One of our objectives was to visit the new shopping malls on the west side of the island and with all the reports of low hotel occupancy rates we were expecting them to be deserted.

The first mall we visited was the Shops at Mauna Lani. The mall was a lot bigger than we expected and had lots of interesting new stores. We hadn’t seen Peter Lik Fine Art Photography before and were impressed with the beauty and illumination of the photos. The Tommy Bahama Emporium has a café above it which looked great and we plan to try it out next time we are in the area. We were pleased to see that signs and menus were in English and Japanese, something we think needs to happen all around the island. There was a huge gourmet grocery store, Foodland Farms, allowing visitors staying in condos and timeshares access to groceries just a short distance away. The mall wasn’t bustling with people, but we were there at 10 AM, before the lunch crowd.

Our next stop was the Queen’s MarketPlace mall in Waikola. This new mall has enough stores now to be interesting and we were eager to try out the recently opened Romano’s Macaroni Grill. The food and service were great and the prices were reasonable compared to food prices in Waikoloa (although they would be considered expensive for Hilo). We were surprised at the large crowd in the mall and Macaroni Grill was full at noon on a Friday.

Next we headed on to Kailua Kona and went to the new mall Kona Commons. It was so crowded that we couldn’t find a place to park, so we gave up. Kona Commons has a PetCo, Office Max, and Sports Authority. A huge Target store is planned to be opened across the street in July, which fortunately has a huge parking lot. This part of Kailua may become a retail magnet. We were pleased that the main roadway into Kailua from the airport was finally free of roadwork with all the lanes open up to first turn into Kailua, which allowed us to easily drive into town without the normal maddening congestion and stop and go traffic.
We stayed at our favorite place in town, the Kona Islander Inn. Room #126 has two Queen beds with a view of the pool and rents for $79.95 a night (less if you stay longer). The pool and hot tub were packed with folks enjoying the sun and cooking on the community barbeque. The beach across from the Islander had all the debris that cleaned off and families were playing on the sand and wading in the tide pools.

Ali’i drive was loaded with cars and people were abundant shopping in the stores and eating in the restaurants at Coconut Grove Marketplace. We went to our favorite Japanese restaurant, Bistro Yokohama, and we tried out the new Mexican restaurant, La Cala, that has taken over the old Rios spot.

Though there were a lot of empty store fronts, those that remained seem to be doing well. We noticed a lot more catering to Japanese visitors which we think will help make Hawaii a better experience for them; the ABC store even accepts Yen now.

We didn’t see nearly as many For Sale signs along Ali’I drive as we did last summer and we met several couples at the Kona Islander that had just bought units and were fixing them up. Though there have been a lot of complaints about the Vog during the last 10 months, there certainly was not a depressed feeling in Kona.

On our return to Hilo we stopped at the Hilton in Waikoloa for a fish sandwich at the café overlooking the Dolphin Quest. The parking lot was jammed with cars. The swimming pool area was filled with people as was Hilton’s lagoon beach. The Dolphin area had been expanded and the café had many more seats, most of which were taken. We wondered if all the people on the Hilton grounds were folks staying in nearby time shares and condos. Perhaps they were enjoying the Hilton’s disneyland-like boat and train rides or perhaps buying day passes to use the Hilton’s swimming pools.

We drove back to Hilo over the vastly improved and freshly paved Saddle road. It is now an easy and fast drive between West Hawaii and East Hawaii, making both sides of the island easily accessible for tourists and residents.

Now back in Hilo, we are wondering why the hotels and malls in west Hawaii we visited were so crowded? We have heard so much news about the lower number of tourists and the low occupancy rates. Our experience motivated us to look more closely at the statistics.

Here is a chart of visitors to Hawaii county over the past five years.

The major uptick in visitors to the Big Island started in 2005. The number of visitors in January 2009 is actually up almost 10,000 visitors from January 2004. But check out the occupancy rates between those two years.

In 2004, the January occupancy rate for the Kohala Coast was 73.5% but in 2009, during the same month, the occupancy rate was 56.5%. That can only indicate that a huge number of new hotel rooms, time shares and condos have become available over the past 5 years. During the same 5 year period the population of the Big Island has increased almost 10%, by 15,919. The combination of new rentals and new residents may be the reason for the packed parking lots and busy malls.

Though many tourist businesses have gone bankrupt over the last year, businesses that provide great value in good locations appear to be doing fine even during this economic contraction. We were delighted to find happy tourists in west Hawaii having a great time on their vacation. We hope this trend continues and that the tourist business thrives on the Big Island.

County of Hawaii statistics

State of Hawaii population statistics

Thursday, March 12, 2009


Here is a list of surprising things we have learned in Hilo, Hawaii.

1) There are a lot of things about food that we just didn’t know before we moved to Hawaii. First, we’ve found the variety of tropical fruits grown on the Big Island to be stunning Bananas alone, (called Mai’a in Hawaiian) have over 50 varieties. And the variety is important culturally (all except two varieties of bananas were forbidden fruit for women to eat under penalty of death until the early 1800’s) and for the survival of the plant (multiple varieties increase the chances of survival of a fruit in case of an attack by bugs or disease). Fruit seeds are more important to our life than we knew. Chocolate is made from seeds that grow in football shaped fruits attached to a cacao tree trunk and coffee “beans” are really the seeds of a bright red edible fruit called the coffee cherry. We didn’t know that most edible fish are nocturnal. Fisherman go out at night to catch fish which explains why fish arrives in the early morning at the Hilo pier. In bad weather, like we’ve had this past week, many fishermen do not to go out which limits the quantity and choices at Suisan’s fish store at the pier as well as the local fish delivered around the island to restaurants and grocery stores.

2) Being in Hilo has made us appreciate the vastness of the Pacific Ocean. It comprises 28% of the Earth’s surface; if the continents of Europe and Asia were combined they would still only fill one third of the area of the Pacific Ocean. From Hawaii it is thousands of miles to any other island nation or continent. Though we thought we knew the ferocity of the Pacific’s waves after living on the west coast of the US, the ocean here is more ferocious and faster changing. The ocean around Hawaii can go from kiddy pool calm to killer waves sets instantly. Even seasoned local fishermen fishing off the shores near Hilo and Puna have been swept away by sudden wave surges and lost to the ocean.

3) We were surprised to learn that the Pacific Islanders were navigating the Pacific Ocean long before the Europeans were able to navigate the Atlantic Ocean. They developed a navigation system based on their own star constellations that allowed them to sail thousands of miles across the Pacific from island to island. Instead of defining huge constellations of disparate stars into animals and human figures that stretches the imagination to visualize, Hawaiian constellations define readily visible star clusters. Constellations like Hoku-‘iwa, Na-hiku (the Big Dipper), Na-hoku-pa (5 stars in a circle), Hanai-a-ka-malama and Hoku-ke’a (the southern cross) combined with knowledge of the tides and phases of the moon allowed navigation in the dark of night with no land in sight for thousands of miles. The information was memorized in chants and transmitted through generations. We can’t imagine the skills and knowledge required to sail across the Pacific Ocean in an outrigger canoe made from hollowed-out trees and tied together with the fibers from coconuts shells.

4) The world feels noticeably Atlantic-centric from Hilo. The news, movies, politics, and even people’s speech and verbal references are centered on Europe and North America. In Hilo the language is infused with Hawaiian, Filipino and Japanese words that are needed to shop or understand directions. We buy fish like Ehu, Opakapaka, Gindai, Uku, Opelu, Ono, and Ahi; and we tackle recipes with produce like Kalo (Taro),’Ulu (Breadfruit), Rambutan, ‘Ohelo berries, and Lilikoi. These aren’t the subjects of mainstream TV. The Earthquakes, volcanic activity, storms, and politics of the islands and people in the Pacific and continent of Hawaii are rarely covered in the news, even by Asian news services.

5) Although rarely mentioned in the international news, massive amounts of SO2 and volcanic gases, known as VOG, are being released from the Big Island’s volcano greatly impacting life in Hawaii. Since the major eruption last year, the daily VOG emissions have been killing crops of tropical flowers and changing the taste of locally grown coffee. We have learned from our solar panel that the VOG strongly reflects the sun’s energy decreasing the solar energy collected and that it persists in the atmosphere for weeks. We think the huge cloud of VOG floating between Hawaii and the island of Guam, 4000 miles away, is having a far greater influence on global weather than the world yet realizes.