Amid a sea of news surrounding the NextEra acquisition of Hawaiian Electric Co. with a focus on renewable energy sources, oil prices are plunging. In fact, according to a report from the University of Hawaii Economic Research Organization, or UHERO, Hawaii stands to save about $104 million per month the way things are going, for a total of $1.25 billion in savings over a year period.
This isn’t going to change Hawaii’s renewable energy goals, as we are still the most oil-dependent state in the country. That means that if/when prices rise again, we will be at their mercy unless we develop the cost-effective harnessing of renewables that the government keeps pushing for.
According to the UHERO report, Hawaii consumes about 790 gigawatt hours a month, on average. The cost per barrel of oil has dropped by nearly $60, and about 75 percent of those savings are estimated to go to businesses and municipalities, while the remaining 25 percent goes to households. The report stated that a household using 600 kilowatt hours a month would save $60-90 on their bill. Those who invested in Maui real estate in the past couple of years are likely recognizing their good timing, but there are expected to be delays on the savings.
It takes time before oil prices feed the electricity prices. The oil that Hawaiian Electric Co. buys in a month is influenced by the average crude prices for the prior three months. That means it could take around four months for customers to see the drop in electric bills, meaning just before summer.
As for those paying for gas on the island, including Maui home owners, residents and even visitors, the savings transfer to their gas prices now. The average price of a gallon of gas in Hawaii recently fell to $3.17, compared to $4 a year ago. We may still be the only state with prices over $3, but that’s because we have to pay for overseas shipping, which isn’t going to change as long as we use oil. That’s why more residents are opting for electric vehicles over time.
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