Par Hawaii is the only oil refinery in all of Hawaii. The refinery converts crude oil into refined products which are then dispatched to the other islands to power cars, homes and planes. It is the beating heart of the state’s oil-dependent economy.
Due to the increase in oil prices as a result of the war in Ukraine, Hawaii's increased reliance on oil is putting pressure on the state's economy. Despite improving energy efficiency and progress in transitioning towards renewables, big obstacles remain. In the meantime, Hawaiians are not finding much relief from the energy crunch.
Out of all the fifty states in the United States, no state is more reliant upon oil for commerce than Hawaii, counting for up to 85% of its energy needs as a state. The primary use for this oil comes in the form of jet fuel, as many of the important commodities and goods requested by the local businesses and populace require delivery via plane.
On top of this, up to a third of the oil used within Hawaii has historically been imported from Russia, meaning that the state most reliant upon oil has lost a significant portion of its reserves. While it does not have the highest gas price yet, (second only to California) its electricity costs per month have also skyrocketed, boasting the highest prices and rates in the country at the moment.
If there is not a serious change in the supply chain in the next coming months, we could see a very dangerous situation unfold within Hawaii's economy, which could lead to some type of state of federal intervention, though only time will tell.
https://www.economist.com/united-states/hawaiis-oil-dependent-economy-is-being-battered-by-russias-war/21808955
Great article. It was interesting to see the direct cause and effect that could happen on their economy. The whole read I was thinking about a family that moved from Hawaii to my hometown in high school, and all their talk seemed to be around their love for the state and their hate for its economy. An islands economy has to be tough. Will be excited to see what happens in the coming months.
ReplyDeleteWhen we think of the US economy we often only consider how changes in supply effect the continental US. Hawaii is a special case because of their significant reliance on imports. With inflation rising across the world along with supply shortages, I think Hawaii's economy will continue to struggle.
ReplyDeleteI think that a change in oil supply was an anticipated outcome of the war in Ukraine. This hits Hawaii especially hard because of it's reliance on oil. I think it will be interesting to see how this plays out in the next few months, but it doesn't seem like there will be an improvement in Hawaiis economy soon.
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