East-West Center in the News

(2013-01-09) Aloha Petroleum, which operates nearly 100 Aloha and Shell gas stations in the state, buys most of its fuel from Tesoro and Chevron because the price is comparable to what Aloha would pay to import gasoline, said Fereidun Fesharaki, an East-West Center senior fellow and chairman of Singaporean-based consultancy FACTS Global Energy.

"If the price (charged by Chevron) were to suddenly go up, then Aloha would import gasoline," Fesharaki said. "After the (Tesoro) refinery closes, the prices here will be the same. People in Hawaii won't notice any difference," Fesharaki said.

The only scenario under which the loss of a refinery could affect the supply of refined products to Hawaii would be if there were a "global crisis" like a major war in Asia, he said. In that situation it would be easier to bring in a tanker of crude oil and process it rather than ship in all the various refined products that would be needed, he said.

"But right now that's not a problem because the world is generally awash in refined products," Fesha­raki said. Tesoro's Hawaii refinery, with a capacity to process 94,000 barrels a day, has been producing significantly less than that in recent years, Fesharaki said. The plant is Tesoro's least profitable, he added.

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(2013-01-09) Energy experts at the East-West Center don't believe there will be any real jump in prices in the near future.

"It doesn't mean supply will be gone. It's only local supply that will be gone," said Kang Wu from the East-West Center.

(2013-01-10) However, analysts are more or less sanguine about what lies ahead. Aloha Petroleum operates almost 100 gas stations, and has ordered most of its gas from the local refineries because the available price was comparable to the cost of importing. But a spike in prices from Chevron would most likely drive Aloha to bring it in from another source at competitive prices, said Fereidun Fesharaki, an East-West Center fellow and expert on the petroleum market. Fesharaki thinks the impact on gasoline prices would be minimal.

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(2013-01-08) The closure will not impact gas or electricity prices for Hawaii residents under normal circumstances, said Fereidun Fesharaki, an international oil consultant and a senior fellow at the East-West Center. But it will make Hawaii more vulnerable to price fluctuations in the international oil market, he said.

“There are plenty of products around and supply and prices will be unaffected,” he told Civil Beat by email. “However, if there is a global crisis, then Hawaii is more vulnerable then anywhere else in the mainland.”

... And Fesharaki said that the combination of Hawaii’s renewable energy goals and new environmental regulations makes it untenable for refiners to survive in Hawaii in the long-term. He said it was important for Hawaii to move forward on LNG.

“If the refinery is not there to produce fuel oil, the only realistic option is either using expensive diesel fuel or LNG. Renewable options are much more long-term goals and only people who speak from passion not logic believe that in the next few years there is any other option,” he said in an email. “These changes are before us within three to five years and pontificating for a dream which may come true in 2030s and 2040s does serious harm to the people of Hawaii and to Hawaiian economy and competitiveness. We have no choice but to go to LNG: It is cheaper, less polluting and home grown."

(2013-01-17) Chevron Corp. will likely follow Tesoro Corp.'s lead and close its Campbell Industrial Park refinery within a few years as the environment to do business in Hawaii becomes more difficult, an East-West Center energy expert said Wednesday.

If both of Hawaii's refineries are closed, the state would have to import 100 percent of its gasoline and other refined products, a shift that would not affect consumer prices, said Fereidun Fesharaki, an East-West Center senior fellow and chairman of a global energy consulting firm.

The refineries, which already have a hard time making money in the relatively small market, are being squeezed further by the state's shift away from oil to renewable energy sources and pending Environmental Protection Agency regulations that will make it virtually impossible to use fuel oil for electricity generation, Fesharaki said at a media briefing.

... "There is a reasonable likelihood that the Chevron refinery will also close but that's probably a couple of years down the road," Fesharaki said.

Although Hawaii's transition to clean energy will take place through the next several decades, new EPA rules reducing allowable emissions from power plants are scheduled to be phased in from 2016 to 2017, he said. The regulations will increase the pressure on Hawaii's utilities to stop burning the low sulfur fuel oil they now burn and switch to cleaner fuels, such as liquified natural gas, Fesharaki said.

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(2013-01-17) Fereidun Fesharaki, an oil and natural gas expert and fellow at the East-West Center, is a strong supporter of importing LNG. He said that the state wasn’t going to achieve its renewable energy goals by the dates outlined. By 2030, 40 percent of the state’s energy must be derived from renewable energy sources.

“The pace and direction which has been set is pretty OK,” he said of the state’s clean energy policy during a media briefing on Wednesday. “But the timing is unrealistic.”

In the meantime, he said it makes sense to switch to LNG, particularly given the current state of Hawaii's oil refineries. Tesoro, one of the state’s two oil refineries announced last week that it was shutting down.

And Fesharaki predicts that Chevron, Hawaii’s other refinery, will shut down within the next couple of years, making the state more vulnerable to major disruptions in the international oil market.

... Building the extensive infrastructure needed for LNG, including an import terminal, regasification plant and pipelines, will cost at least half a billion dollars, said Fesharaki.

... Currently, diesel prices are on par with what Hawaii is paying for low sulfur fuel oil, said Fesharaki. But in coming years, he said diesel prices are expected to be higher. And in the long run, despite the hefty investments needed for LNG infrastructure, he said that natural gas would be cheaper for Hawaii consumers.

(2013-01-17) “For the past 50 years, we have been locked into an energy structure, [and] now it is rapidly changing,” Fesharaki said.

He says that there are two factors contributing to this rapidly changing environment, including the upcoming changes at both refineries and U.S. Environmental Protection Agency rules starting in 2015 that will make it impossible to use fuel oil in power generation.

“Any fuel that leaves ash when burning will need to be eliminated,” Fesharaki said.

He says that only two options remain for the state, including diesel fuel and liquefied natural gas.

“There are no other options,” Fesharaki said. “With diesel, there’s no ash but can you buy it? [The state would] have to bring it in with three points of entry: Chevron, Tesoro or Aloha Petroleum.”

... In terms of LNG, which Fesharaki estimates could cost six times less than the cost of oil, building infrastructure also is a huge challenge.

“Can’t do it for less than $500 million,” he said.

A key decision by the Federal Energy Regulatory Commission on Hawaii Gas’ plan to begin shipping small amounts of LNG to Hawaii as a backup fuel source is expected to come out on Thursday, according to Fesharaki.

“We can’t wait for renewables,” he said. “The pace and direction of the [Hawaii Clean Energy Initiative] is okay but the timing is difficult to reach.”