Posted on: Saturday, July 19, 2008
Honolulu gas prices hit record $4.38And no relief likely as drop on Mainland not reflected in Hawaii
By Dan Nakaso
Advertiser Staff Writer
While the nation's average gasoline price dropped yesterday, the average cost of a gallon of regular on O'ahu rose a penny to a record $4.38, according to AAA data.
As Mainland prices have fallen, Hawai'i has regained its place as the second costliest state in the nation — pricier than California and only topped by Alaska.
O'ahu drivers yesterday reacted with disgust and resignation.
"Why should I cry?" asked Wendell Hue, a driver for Hawaiian Island Medical. "Cannot do anything about it. Everything go up. I wish my pay would go up to keep up. But it doesn't."
Nationally, the average price for regular gas dropped to $4.105 a gallon yesterday, which means Honolulu drivers are paying almost 28 cents more than their Mainland counterparts.
But the gap could widen, as historically Honolulu prices have topped those on the Mainland by about 36 cents a gallon.
And while some analysts said a nationwide average of $4 or even lower could be in the offing — almost unthinkable in a summer when there has seemed to be no relief at the pump — the continuing price increases here suggest there may not be any relief for Hawai'i drivers.
Bill Green, the former owner of Kahala Shell who is now a consultant for the operation, said Hawai'i's unique fuel market means price drops elsewhere don't necessarily follow here.
"We're the only market in the United States that's totally supplied from Asia and the East," Green said. "We're not subject to the same competitive pressures that make prices go up and go down on the Mainland."
What's causing some analysts to even consider cheaper gasoline is the recent precipitous drop in the price of crude oil, from which gasoline is refined.
Crude recorded its biggest weekly price drop ever, falling from more than $147 a barrel last week to $128.88 yesterday, or a 12.3 percent drop.
That caused a new view from some industry experts who just days ago thought there was more juice left in oil's meteoric run.
"If this is not the bubble's implosion, then it's a reasonable facsimile," analyst and trader Stephen Schork said in his daily market commentary. "Time will tell. Nevertheless, for the time being we no longer care to hold a bullish view."
But despite the national drops in oil and gas prices, fuel prices here seem headed for increases, with the statewide average of $4.484 for a gallon of regular fuel ranking second in the nation only behind Alaska's $4.65.
By comparison, California's average prices fell from $4.607 a month ago to $4.480 yesterday, moving them from the second to the third costliest state.
A year ago, Hawai'i drivers paid an average of $3.296 per gallon, compared with a Mainland average of $3.020 per gallon.
Andrea Dias of Pearl City was like many others yesterday who did not fill up their gas tank. She only pumped $20 worth of regular into her 2007 Nissan Sentra to get through the weekend.
"It's ridiculous," she said. "I'm very frustrated. I only drive when I need to and plan my routes as effectively as possible because these prices are ridiculous."
People in Honolulu still have it better than drivers in Hilo, who saw a 2-cent-per-gallon increase and yesterday were paying an average of $4.52 a gallon.
In Wailuku, Maui, prices also jumped 2 cents per gallon from last week and yesterday were averaging $4.71 per gallon.
The divergence between state gasoline prices and elsewhere has been the subject of controversy and legislative attention.
State lawmakers passed the nation's only gasoline price cap law in 2005 in part because of concerns that state gasoline prices didn't sufficiently parallel Mainland prices. Proponents argued the cap lowered prices while critics contended it resulted in higher prices by giving oil companies an incentive to charge the maximum prices allowed by law.
The caps, which tied Hawai'i prices to Mainland markets, caused state prices to rapidly rise and fall. The gas cap law was suspended in May 2006.
A report issued late in 2007 said Hawai'i gasoline price cap would have cut prices 5 cents to 10 cents a gallon had it not been suspended.
One of the concerns expressed by lawmakers was the profit margins of oil companies.
But Green, the consultant, said he believes Honolulu drivers, in general, no longer blame individual gas stations for high prices. But many of them still don't understand that gas sales provide only pennies per gallon for station owners.
Instead of making money off gasoline, Green said Kahala Shell's profits come from its car wash and quick lube operations and sales of propane gas and snacks in the station's store.
"Gasoline is nothing more than a leader item," he said.
None of the explanations placated drivers such as Donna Domingues of Punalu'u. Not the uniqueness of Hawai'i's market. Not the profit margins on gas.
"Prices are just too high," she said. "They just keep going higher and higher each day."
Instead of paying more than $100 to fill up her tank, Domingues yesterday only put $50 into the 2007 Ford F-150 truck she was driving. "I only buy what I need anymore," she said. "It's just too expensive."
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