 Okay, we're back. We're live. I'm Jay Fiedel. This is Think Tech and it's a given Wednesday, and it's energy in America At three o'clock Hawaii time, but we're talking to Washington or is it New York? Just Jeff Kissel of e-brake joins us today to discuss the a Keystone pipeline and we're talking about President Trump's action in restoring Restarting the Keystone initiative welcome to the show Jeff Thanks, Jay. It's it's wonderful to be with you. I'm just somewhere east of Burbank, so well Let's leave it at that. Okay. All right, fine. So, um, you know it was it was headlines this morning we like to be current and President Trump has restarted not only Keystone, but the the Dakota pipeline Can you tell us what happened from the energy energy? Yes, you know think tank point of view Well, this is one of the promises that President Trump made during his campaign that he's he's following through on and What he has decided to do is allow the State Department to revisit the decision that the Obama administration made and the Obama administration as you may recall Decided against permitting the Keystone pipeline to move through That pipeline brings crude oil from Alberta, Canada all the way down to the United States Texas Gulf Coast and it's a lot more important for Hawaii than people realize Right now and I'll be glad to go into the details Well, let's let's talk about the you know the implications of the immediate players first So the first thing is that the government has clearly changed its policy And on the way to the show I was listening to an NPR story about how how the Trump administration is changing the Department of Justice And there's a lot of concern about the Civil Rights Act matter because he's hired Political appointees that is not not appointees it has to be consented to by the Senate but appointees that are embedded in the Department of Justice who are going to change policy on enforcement of the Civil Rights Act and so that's hot news now So I think what we see now four days after the inauguration is he's taking a lot of action in a lot of places and Making a lot of changes. I suppose most of them are consistent with what he was saying before so this is a change on energy and What we have here is a change that has going to have ripple effect in many directions The first the first effect is I guess what what has happened here is Let's see we have a new we have a new energy or at least he's he will be a new once he's confirmed We have Rick Perry going to be the new you know director of energy and He's going to he's going to be consistent with this policy of allowing keystone and for that matter the Dakota pipeline to go forward So that's easy the government has changed. What about Canada? How does this affect Canada? How does it affect? Gee, I guess it has affect the United States well it affects United States in a lot of different ways and I want to talk about the Canadian crude in terms of what it really is It's a a crude oil that allows the refineries that have been operating in the Texas Gulf and in Louisiana To operate a lot more efficiently and produce a lot more product The United States is one of the biggest energy Exporters in the world even though it's illegal to export crude. It is not X illegal to export product So we're going to see a lot more United States oil products exported to Europe South America and more importantly to the Pacific Where they will help hold down the cost of energy in Hawaii? At least until we can put in a renewable energy strategy what's the point chef of of Not being permitted to export crude, but being permitted to export product What's the policy reason for making that distinction well Jay? You're not old enough to remember the 1970s and and we had a very difficult time with the Arab oil embargo as a country and especially in Hawaii and and during those times they passed a lot of legislation and one of the laws that was passed and in fact it predated the oil embargo because Came in with crude oil was price control Was that we we decided that as a matter of public policy? We would not allow the crude oil to be exported from the United States We wanted to encourage the development of refinery capacity in the United States. So we allowed Refined products to be exported That's really the genesis of it mm-hmm, okay. Well, I mean arguably I suppose You could you make a buck on refining and then exporting and that may not subject to the market of commodities And of course, you know those the second world war was fresh in everyone's memory and one of the reasons We were able to prevail in the second world war was because we had a Lot of our own crude production and we produced the refined products that that allowed us as as President Roosevelt's advisor said to float to victory on a sea of oil Really that did happen. So this is coming from Alberta Alberta has a lot of oil huge oil industry But you know in the case of natural gas, which we're not talking about natural gas talking about oil right now Natural gas had the promise of lasting for a long time and being cheap for a long time in this case You know, are we are we subject to a limitation on the quantity? Is this going to be subject to the whole analysis of peak oil? And I guess You know how important is the pipeline in delivering that and how much money would be spend on it and is it worth it? Well, let's talk about those in three sections. Okay constant of peak oil is gone Oil is really available in almost any quantity. We want it. It's a matter of the cost to produce it The unconventional oil that's been discovered over the last ten years Is being exploited only one or two percent of its total resource? so 98% of the unconventional oil that we know about is still in the ground and At at $50 a barrel. It's barely Break even to produce it at a hundred dollars a barrel They make a lot of money at $500 a barrel you can imagine how much of that oil could be produced So the idea of a limited oil supply Is really an idea that kind of died a number of years ago Now that doesn't mean we should be using more oil All it means is that we have to look at it in different terms instead of looking at it as a supply issue We've got to look at it as a cost issue as an environmental issue as a quality life issue Those are very very important things equally important to how much oil there is absolutely Okay, fair enough now forgetting Hawaii for a minute just looking at the country in general Is is oil a bridge fuel for the country in general shouldn't the country in general be moving to non fossil fuels? Aren't we concerned about the environment and global warming? America is moving away from fossil fuels and they're the market is moving America away from fossil fuels They're doing it in a number of ways the most important one is that there is a public awareness that That fuels that produce excessive greenhouse gas are not good So when they make purchasing decisions They're aware of just like they're aware of of how humanely the tuna is captured and whether it's dolphin free And whether they are aware of whether they're walking into a green building and whether procter and gamble or coca-cola Will build their next factory as an energy efficient environmentally friendly factory so they can put that on their label Those those that public is developing that awareness and that's a really positive thing The other thing that's happened of course is that the public knows That oil can rise to a hundred and twenty or a hundred and forty dollars a barrel and beyond So they're they're still conserving it Although my my friends and neighbors who are buying larger and larger cars now that gasoline is cheap are not But the airlines certainly are good examples and they're very good citizens these days But you know what what do you say to the argument that if we if we didn't have a big supply of oil We would be forced to spend our money and our you know our effort on on building renewables If we have an easy supply of oil Then we're less motivated to move to renewables I mean that nationally That's actually not the case if you look at the statistics and that's what our organization does we look at these statistics We see that we are investing more and more in renewables and less in traditional conventional fuels and it's because we're meeting public demand the Tesla Motor Car Company the People who are building now five manufacturers of hydrogen fuel cell vehicles The people who are building energy efficient water heaters air conditioners heat pumps and appliances They're they're all moving away from oil even though Oil is relatively inexpensive oil is cheaper than it in real terms oil is cheaper than it has been in almost 50 years What is it right now? Oil is around $50 a barrel a little bit old So it's hanging in there for the past six months anyway oil went up to forty four dollars a barrel in 1974 Today would be almost $200 a barrel Yeah, so I remember those days when when people had to make choices between buying food of food and heating their homes May come again who knows So going back to you know the people who are involved, you know the sort of the spokes in the wheel the people who feel the ripple effect What about the oil companies? You know, what does keystone mean to the oil companies and I include Exxon with due regard for Rex Tillerson The oil companies benefit by having keystone and for that matter the Dakota pipeline Rex is going to make the decision on the keystone pipeline, of course Right secretary of state, of course. Oh, I mean, that's that that is that's going to happen and You know we have to be aware of that the oil companies today are Not near the same organizations. They were 25 or or even 10 years ago Most of the oil companies have divested themselves of their oil refineries and their distribution systems they're producing crude oil and natural gas and It's that's a financial decision that they have made because the capital in the oil industry is Is actually diminishing as the price of oil declines Lesson and incentive to put capital into it those same oil companies for an example BP are Investing very heavily in renewables and energy efficiency products and and a whole host of other things that are related to their industry Including technology. Yeah, good for them. That's smart You're gonna move you're gonna move with the changing changing time one more question before we go to our break Jeff And that is this so this morning With the stroke of a pen effectively The president reversed the Obama decision on a keystone and I guess I'm like at the quota pipeline and now Now it's gonna be it's gonna happen But it's still in development and the development company hasn't finished building the pipeline I guess it'll take some time And my question to you is how long will it take to finish the whole thing? And you know all the construction contemplated it crosses the country north to south And how long will it be before we actually see some oil flow through that pipeline of those pipelines? And how long will it be before it has an effect on things on prices on supply? Whatever? Most of the pipeline is already installed It won't take long for them to install the remainder of the pipeline But it's already having an impact on the market because people Anticipate the future in their purchasing decisions and pay so the Texas Gulf refineries are Investing in upgrading their hardware so they can take advantage of that crude oil And they can blend it with the crude oil that they get locally and make the the products That are so important to this economy is as we move forward So how what would you say is it is it weeks is it months is it years before it'll actually you know spill out the other side It's a few years And you know because I don't know how long it will take the State Department to actually make the decision I don't know whether there'll be court challenges. You know, there are a lot of things that can go on Once the State Department makes its decision and You've got to allow for that to occur. Yeah, and you can bet the environmentalists are going to be hot on this issue and The Indian tribes involved they'll be hot on this issue and anybody supports the environmentalists You know who feels you know strongly about climate change for that matter Or supports the Indian tribes going to be hot on this issue So I think your suggestion of the possibility of litigation is Well, that's a fair chance that'll happen. Don't you think I think there's a financial chance you're going to see public protest I think you're going to see litigation and I think you will see attempts after the decision is made to To change that decision. Yeah, I'm I'm not I'm not smart enough to tell you what the outcome of That activity will be but it's it's clear that that If you look at the demonstrations that are occurring today in the country That people are in the mood to become more activist than than they were years ago So yeah, so interesting we in the Chinese sense we live in interesting times Let's take one minute break Jeff Kissel as Jeff Kissel of E-Pring energy policy and In what was in Washington in New York? I never I never got that straight We are we're in Washington DC, but I'm sitting in New York City right now, okay? And I'm sitting here in Honolulu and we're both going to take a break at the same time magic the magic of telecom Hello, and Aloha My name is Raya Salter and I am the host of power of Hawaii where Hawaii comes together To figure out how we're going to work towards a clean and renewable energy future We have exciting conversations with all kinds of stakeholders everyone who needs to come together to talk about renewable energy Be they engineers advocates lawyers utility executives Musicians or artists to see how we can come together to make a new renewable future Tuesdays at 1 p.m. Hi, I'm Tim appa cello. I'm the host for moving Hawaii forward And the show is dedicated to transportation and traffic issues in Oahu We are all frustrated by sitting in our cars in bumper-to-bumper traffic And this show is dedicated to talking to with folks that not only we can define the problem But we hopefully can come to the table with some solutions So I invite you to join me every Tuesday at 12 noon and let's move Hawaii forward Okay, we're back for a live this instinct text on a given Wednesday afternoon It's a three o'clock rock and we do as we do very often Energy in America and today we're doing with with Jeff Kissel who is with e-prink in Washington, DC But he joins us by Skype from New York So Jeff you had plenty of experience and time in grade and time as the CEO of Hawaii gas to study the Hawaii market And to figure out the ripple effects of these changes in energy supply on Hawaii So we spoke we spoke about you know the the oil industry We spoke about you know the protest groups the environmental groups we we spoke about the country in general But we really haven't drilled down on what what what this means for Hawaii? Let's assume for this discussion that protest or not keystone is open Let's assume for this discussion that they finished the pipeline and it actually supplies Canadian oil Alberta oil Into the United States. How does this affect Hawaii and when I have I? Have a different way of describing this because I think it's I need to lay a little bit of foundation and I Hope I don't put people to sleep doing go for it Hawaii has decided to pursue a renewable energy strategy Whether that is 50% or 100% doesn't matter Hawaii is directionally moving toward using more renewables in the future not less In doing that it has decided not to take any intermediate steps But to move from oil which is largely responsible for Hawaii's supplying Hawaii's energy needs to renewables Well, if you move from one thing to another you have to get there and Unless you're going to use some other means to get there like magic You're stuck with oil being the bridge to Hawaii's renewable energy future Can I dwell on that for a minute with you? What why why do we need a bridge? I mean, why can't we just Hunker down right now that the 2017 legislature does what it has to do in terms of tax credits and incentives That it moves the economics around so that we the people have no choice But to get off fossil fuel and go to clean energy right now on an accelerated accelerated basis. Why can't we do that? Do you remember 9-11 when the hotels emptied? Yes, and nobody flew on any airplanes Okay Or the economic collapse of the first part of the 21st century That is essentially what you're looking at if if we shut off the oil economically not physically And and what would happen would be airplane tickets would go back to a thousand dollars a seat for economy class Electricity would go from the current hundred and twenty five hundred and thirty dollars a month That everyone is that the average household is currently paying to five hundred dollars a month that many of us used to pay Because when you when you convert the price of a barrel of oil to the energy cost in a kilowatt of electricity or in Terms of a revenue passenger mile on an airplane It's horrific, and I did the math for you Jay just so that you could get a feel for it Today At $52 of barrel if you were to buy that same barrel Which we all do in terms of kilowatt hours of electricity The real cost that we're paying is six hundred and fifty dollars How do you get to that barrel of electricity is is costing about six hundred and fifty dollars? I don't I don't know whether you can see my slides, but basically There are one thousand six hundred and twenty eight kilowatt hours of energy In a forty two gallon barrel of oil Mm-hmm, if you pay fifty two dollars for that barrel raw That's fine, but we can't when we buy it through the power lines. We pay forty cents a kilowatt hour You multiply forty cents times one thousand six hundred and twenty eight, and you get six hundred and fifty dollars of barrel So if we were to raise the cost, you know Let's just say the state of Hawaii decided that public policy required that we we grossly increased the price of oil Let's say the state of Hawaii wanted to bring that price back up to 2007 eight nine levels make it a hundred and fifty dollars That means you're going to be paying almost $2,000 of barrel for the electricity that you buy from the neighborhood power company Today the average cost of Solar electric per barrel in the United States on an equivalent basis is less than two hundred dollars So people would be driven when people would then be driven to solar right right away, wouldn't they? Yes, but Unfortunately, the state of Hawaii has managed to kill off Residential solar and I can't tell you why they've done it But I can tell you that from installing a megawatt a month on top of people's rooftops They've gone to practically nothing So for Hawaii to to move to a renewable energy strategy. It's putting more and more oil In the way right now what I hear you saying is that when you're talking about Sort of the ship of the economic state so to speak you can't make Disruptive changes and disruptive changes, you know, they can be nice theoretically But when you get down to the ground the way people live and how their pocketbooks work Disruptive changes are very painful and therefore what I hear you saying is therefore a bridge Would make it less painful would allow us to stretch it over time Regardless of how you do this You're stuck with oil until it's done and that's that's what's happened now. Hawaii has managed to Slow itself down dramatically by killing off the residential solar industry It's just put a huge roadblock in its own way and Hawaii is already a very very high-cost environment The just to give you three quick examples the cost of the rail transit in Hawaii for the 18 miles is Nearly six times the cost of that same transit Built in Los Angeles Dallas and a number of metropolitan areas cost of the worker Doing work in Pearl Harbor is the highest cost for that kind of work in any shipyard in the United States When you when you look at that and combine that with the other costs that our Citizens have to incur if you were to to layer on Oil taxes at higher energy costs What you're doing is your slowing development. You're not speeding up that bridge to the future She the goalposts now. Yeah. Well, that would be a great concern So looking at it from that point of view We only have two or three minutes left here looking at it from that point of view What what should happen here? I guess I guess your view of it is that whatever the other considerations are around keystone for Hawaii on an economic basis what I hear you saying is we we could we could use oil at a cheaper price We could use a greater supply. We could use a domestic supply instead of from the Middle East And that keystone helps do all of that therefore what I hear you saying is Keystone is something that we should support despite, you know, the fact that a lot of people are really off fossil fuel in the state They don't want any part of it But the fact as you have explained it is that like it or not we need it You know, you you need it because without inexpensive oil Solar wind and the other forms of renewable energy Get further pushed further and further off into the distance and as a result There's more vulnerability to the economy if oil prices go up in the interim because oil is all we've got right now for 87% of the energy requirement in the state of Hawaii and that you can't change that Without investment if you're paying money for high-priced oil That money is not available to invest in efficient Reasonably priced renewables. Yeah, and we have a million cars on the road and They're all most you know short of except for 5,000 of them. They're all fossil fuel cars We have our utility system is pretty much all Driven on fossil fuels, so that would be disruptive at the least but let me ask you You know what what is your advice then on how we reach? Our energy goals, which we talk about a lot and the energy policy forum of which I am a member Talks about a lot. How do we reach those goals and factor all these considerations in and not lose the hold of time a Lot of time or big point Jeff get distracted because the risk of a bridge fuel You should get married to it and then you can't get away from it This would be really bad for us because then we'd be losing the initiative We have spent so much time and energy. No pun intended on developing and still are how do we handle this? What's your advice? The answer the answer is investment and you've got to create an environment where Investment is favorable. You can't have a five-hour gridlock because you had a water main failure and And and expect an economy to function. That's that's a symptom of a far greater problem It's lack of investment and and if you put roadblocks in your way You basically Make investment less and less viable Oil is the Hawaii bridge to the future. You know, our our Institute is not advocating it We're stating fact Okay Jeff it's great to talk to you I sure enjoy it and feels like you're right across the table from me I hope I get to see you, you know personally soon wish you well for 2017 Hope we can do more shows like this and and cover these subjects as they go forward because there will be more news I guarantee it for you Jeff kisser with Thank you for the opportunity to talk to you. Thank you Jeff. Aloha Jeff