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Wednesday, August 31, 2005



Katrina certain
to strike isles
at the pump

» Isle workers survive as disaster's hostages

With damage from Hurricane Katrina driving energy prices to new highs, Hawaii motorists will learn today the storm's effect on island gasoline prices.

Meanwhile, the Lingle administration set up hotlines for people to report any perceived problems related to the price caps, which are set to take effect tomorrow.

Even as oil companies began assessing the damage to their Gulf Coast operations yesterday, the impact on gasoline prices already was being felt.

In some Gulf Coast wholesale markets, gasoline was being priced as high as $2.85 a gallon, said Tom Kloza, director of the Wall, N.J.-based Oil Price Information Service. That was $1.04 higher than the weekday average in that market for Aug. 17-23, which was used in calculating Hawaii's price cap on wholesale gas.

"These are the types of ripple impacts that will affect Hawaii in a more direct way than they ever did before," said John Tantlinger, a program manager in the Department of Business, Economic Development and Tourism.

Hawaii's price cap formula is tied to an average of spot wholesale prices in the Gulf Coast, New York and Los Angeles.

The Public Utilities Commission each week sets a baseline price for wholesale gas using an average of spot prices in the three mainland markets. Fixed costs to account for shipping, storing and delivering gasoline across the state are added to that baseline price to arrive at the maximum wholesale price. Retail prices are then set after taxes and dealer markups are added.

Wholesale price caps for tomorrow through Sunday have been set already, so any increases would be reflected in the price cap calculations being posted today and effective for the week of Sept. 5.


Gas cap hotlines

The state's new consumer hotlines to report problems with the new gas cap law are:

» Oahu, 586-2769
» Neighbor isles, (800) 830-4295

The state also has a Web site with consumer information:

» www.gascap.hawaii.gov

Owners and operators of gas stations who have problems can contact the state:

» Phone: (808) 586-2752
» E-mail: gasoline@dbedt.hawaii.gov


The current baseline price for wholesale gasoline is $1.87 a gallon, based on conditions in the three target markets for Aug. 17-23, before Hurricane Katrina made landfall. The Gulf Coast average in the calculation was $1.81, New York was $1.83 and Los Angeles was $1.98.

The baseline price being posted today will be calculated using market data from last Wednesday through yesterday, and is almost certain to go up.

Analysts said wholesale prices in the Gulf Coast and New York, which receives much of its oil and gas supplies from the storm-ravaged region, saw price spikes as high as 35 cents a gallon this week. Prices jumped after at least eight refineries in the path of the storm had to shut down or reduce operations, taking out anywhere from 8 percent to 10 percent of the nation's production capacity, according to company and federal reports.

Statewide, the average for regular unleaded was at a record $2.91 a gallon yesterday, 30 cents higher than the national average, according to AAA's Fuel Gauge Report.

The exact effect of the "gas cap" on pump prices will not be known until tomorrow.

Chevron USA Inc. and Tesoro Hawaii Corp., the two main wholesalers in Hawaii, have not said whether they plan to charge the maximum allowed under the price cap, although analysts expect they will while they adjust to the new regulations.

Meanwhile, the state Department of Commerce and Consumer Affairs has set up hotlines for people to report any perceived problems with the price caps.

Lingle said her office will investigate any potential problem to determine whether it is being caused by the price caps and is bad enough for her to step in and suspend the price cap law, which she has the power to do.

"If there are severe impacts -- you are in line in a gas station and you drive up and they tell you they don't have gas, or the price is so high -- you need to call in," Lingle said Monday.

Lingle previously said high prices alone would not be enough to prompt her to suspend the price cap. Some adverse effects her administration plans to watch for include emergency vehicles not being able to get fuel or a notice of intent to close from one of the state's two oil refineries.

More information also is available online from the Department of Commerce and Consumer Affairs' Division of Consumer Advocacy at gascap.hawaii.gov.


Star-Bulletin reporter Richard Borreca and the
Associated Press contributed to this report.



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