Friday, March 28, 2003

High isle gas prices
not solely due to war

By David Briscoe
Associated Press

Hawaii's record-high gas prices cannot be blamed solely on the war in Iraq, according to energy analysts.

Average prices at gas pumps in Hawaii hit a record high of $2.06 a gallon for regular gas after the war started on March 19, even as prices on the mainland fell slightly as the products of cheaper crude reached retail markets. Yesterday's Hawaii average was $2.05.

While uncertainty of war's impact on energy supplies has "cast a shadow over oil markets," a "confluence of factors" is to blame for high prices, said Fereidun Fesharaki, an energy expert at the East-West Center.

A crippling strike in Venezuela, ethnic warfare in Nigeria, cold weather across North America and other factors all have helped drive up crude oil prices worldwide and gas prices for American consumers, Fesharaki said.

"The Iraqi war only serves to make other matters sharper and make them more difficult," Fesharaki said.

U.S. gas prices, before taxes, are now higher than they are in Europe, he said. Taxes make up 80 percent of the price at the pump in Europe, with drivers paying $5 a gallon or more.

Most of the oil for Hawaii refineries currently comes mainly from Alaska's North Slope and Indonesia. None of it comes from Iraq, although the United States has been buying about 60 percent of Saddam Hussein's oil.

While prices in Hawaii generally will follow global trends, no matter where the supply originates, the state is more dependent upon oil than the U.S. mainland, said Jeff Brown, an East-West Center researcher.

The islands get 90 percent of their energy from oil, while the average for other states is 40 percent, Brown said.

This magnifies the impact of oil cost increases, he said, noting that electricity bills already are among the highest in the nation. Fuel costs also account for 15-25 percent of air travel cost, he said.

To highlight the impact on the overall Hawaii economy, Brown said a $10 increase in the cost of a barrel of crude oil would consume $1.4 million a day in added energy cost for the state.

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