Think Inc.
A forum for Hawaii's
business community to discuss
current events and issues

Sunday, July 18, 2004


Dwindling reserves will
force U.S. change on oil

In about five years we will have burned half of all the oil the world will ever produce.

The End of Oil

M. King Hubbert, probably the greatest of the 20th century's geophysicists, predicted in 1958 that the United States would have used up half of its oil in 1970. To the surprise of nearly everyone, he proved to be right on target. Several experts on oil have since used Hubbert's general approach, and 2010 is the consensus year for Hubbert's peak to be topped. If, as one expert believes, the Middle Eastern producers have substantially overstated their reserves to artificially increase their share of the Organization of Petroleum Exporting Countries production allowances, we may already have reached the peak.

The consequence is easily predictable. Demand will continue to rise, production will fall by 2 percent a year and oil prices will rise.

If that scenario has an eerie resemblance to 2004, it is because OPEC has instituted production cuts three times in the past year, and the non-OPEC producers are no longer able to make up the difference by increasing their production. China, already the world's second-largest consumer of oil, increased its imports by 37 percent in the past year, 18 percent in the first quarter alone.

Even if OPEC production cuts don't hold up, they serve to remind that we are not in control of the price of the U.S. economy's most essential commodity, oil. An increasingly hostile group of Middle Eastern nations are in control, and unless we kick our addiction to oil, they can hold us hostage.

The counter to this scenario is that we have always found more oil, that the marketplace will spur exploration efforts to find vast new reserves. However, not since 1980 have additions of new reserves exceeded consumption. We now are discovering fewer than 8 billion barrels annually compared with the 28 billion barrels we consume.

Putting it another way, suppose that an amount of oil equal to all that the United States will ever produce, a 200 billion-barrel bonanza, is found. At our projected rate of consumption, the 200 billion barrels would be burned in seven years!

Optimists cite the Athabaska tar sands, which contain 900 billion barrels of oil so viscous that the sand has to be mined and treated with hot water. But it is costly to process and environmentally damaging.

There are no fossil fuel panaceas. Natural gas production in the United States will peak soon.

What does the future hold?

The price of oil, now at about $40 a barrel, will probably rise to more than $100 a barrel in less than 10 years. In 2004 dollars that is comparable to the peak price reached in 1981. Oil-driven additions to the cost of nearly everything are likely to drive us into recession.

Making some sacrifices by reducing consumption and investing in transitional energy resources now while relatively cheap oil is still available are the alternatives to waiting until a crisis forces our political leaders to act. Whether the federal government can act in time is questionable, but we in Hawaii can act independently and we can act soon.

It is a fact that more than 90 percent of all our energy resources are derived from oil. This year's oil imports will raise the energy bill by 40 percent, to somewhere around $2 billion -- all cash exported out of Hawaii's economy. The even larger price increases in the future will freeze our state's economic growth unless we find cost-competitive alternatives and conserve.

There are legislative carrots in place to conserve energy and stimulate alternatives to oil that already have begun to work. The goal is to use money saved by importing less fuel to create alternative fuel industries. If we are determined, we might be able to escape the worst of the coming oil crisis economically even stronger than before.

Barry Raleigh is executive director of the Center for a Sustainable Future and Hawaii Natural Energy Institute, University of Hawaii.


Rent a data center
for reliability
at a lower cost

Last of two parts

In Part 1, we talked about all the things a good data center needs. Now we'll talk about what data centers are used for, why you might need one and what to look for if you're considering using one. In short, we'll answer the question, "I care about this because?"

So what are data centers used for? In part 1, we described a data center as an optimal place to house operational computers and equipment.

In the old days, any company with a computer needed a data center because the computers were all big hunks of metal that required specialized power and cooling -- some of them were even cooled by water believe it or not. But today's computers are much smaller, run on ordinary power and don't generate a lot of heat. Most companies feel they cannot justify the expense of building a data center, which can easily run into the tens of thousands of dollars, if not more. So they get by with less -- less power, less cooling and less security, all of which translates into less reliability.

This is a workable situation for some organizations, but not if they need to run their systems 24/7. With the advent of the Internet, this is clearly becoming more of a requirement.

What can you do? According to Fred Rodi from the local office of Equinix, a global provider of data center services, "Many companies have found that by outsourcing their data center operations, they can drastically enhance the reliability and performance of their Internet and network operations while reducing the costs of doing it on their own."

Fred really nails this one. Businesses can purchase services from data center providers like Equinix that can be more cost effective than doing it themselves.

What kinds of services can you get from a data center provider? Clearly, a prime benefit is placing your systems in a facility that has ample and reliable power, cooling, safety and security.

One feature we didn't talk about in part 1 is Internet connectivity. Virtually all data centers tout multiple, high-speed connections from their facility to the Internet. Such connections usually are provided by multiple vendors to ensure a diverse path to the Internet; and diversity is important. If you have eight Internet connections that all take the same path back to an ISP and that path is disrupted for any reason -- say, a backhoe accidentally digs it up -- you're out of luck. The type of high-speed redundant Internet connectivity available at data centers is cost-prohibitive for most organizations.

Placing your systems in a data center is referred to as co-location, often abbreviated as "colo." Colo is pretty straightforward. You're basically renting space and Internet connectivity.

Colo by itself is usually a bare-bones service. You must still manage your system to ensure it's running properly and perform all the usual routine tasks such as backups, updates, re-configurations and monitoring. Most of these tasks can be done remotely, but occasionally, you will need to visit the data center in person.

For many people, some or all of these tasks are just too much to handle. The question to ask here is "how much do you really want to worry about your systems?" Many data centers also provide a variety of services to help you manage and monitor them. They can perform all of the day-to-day tasks necessary to keep your systems running properly, including monitoring them to make sure they are operable and tending to them in case of problems. Providers mix and match these services differently, but, in general, you can usually find a plan that will fit your needs.

How do you choose a data center provider? According to Yuka Nagashima, president of local data center provider (and ISP) LavaNet, "There are three main components to an ideal data center partner; 1) technical qualifications, 2) availability of qualified professional expertise, and 3) a fair, reasonable price."

Of course, for many organizations, the bottom line is, well, the bottom line. But remember, as with just about everything else in this world, you get what you pay for.

John Agsalud is president of ISDI Technologies, Inc., a Honolulu-based IT consultancy, specializing in software development, systems integration, and outsourcing. He can be reached at or by calling 944-8742.

To participate in the Think Inc. discussion, e-mail your comments to; fax them to 529-4750; or mail them to Think Inc., Honolulu Star-Bulletin, 7 Waterfront Plaza, Suite 210, 500 Ala Moana, Honolulu, Hawaii 96813. Anonymous submissions will be discarded.


E-mail to Business Editor


Text Site Directory:
[News] [Business] [Features] [Sports] [Editorial] [Do It Electric!]
[Classified Ads] [Search] [Subscribe] [Info] [Letter to Editor]
© 2004 Honolulu Star-Bulletin --