Monday, October 27, 2008

Papers Take Note of Consequences in Oil Price Fall

The steep drop in oil’s price produced contrasting stories today in the Honolulu Advertiser and the San Francisco Chronicle. The local paper focuses on the relief Hawaii consumers are feeling now that electricity charges, shipping costs and gas prices have fallen along with the price of crude.

The sidebar chart that's displayed next to the story (at right) shows Hawaiian Electric Company’s monthly cost of electricity this year, and although those prices look way high compared to the mainland, consider that the price of electrons on the neighbor islands is much higher – e.g., more than 50 cents/kwh on Lanai. Residents can look forward to additional cuts in their bills as long as oil’s price continues to slide.

The Chronicle’s take is through the lens of what the decline has done to renewable energy projects’ prospects, something we speculated about earlier this month. Oil’s spike to more than $145/barrel produced remarkable opportunities for green energy developers, but as the Chronicle notes, there’s less excitement now. "When oil comes down, there's still interest, but it's not as passionate. That's a potential risk,” says one observer.

No one knows how long this slide in oil’s price will last, but nearly everyone expects it to climb with a vengeance again someday. The market eventually is sure to reward those with enough vision and temerity to invest in renewables. We’re breathing easier now, but breathlessness is something we can anticipate again one day.

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