Isle gas prices still
leading the nation

While the statewide average for regular unleaded gasoline remained the highest in the country, prices began to come down at the pumps as new, lower price caps on wholesale gas took effect yesterday.

Meanwhile, Gov. Linda Lingle said she would be talking with lawmakers about what the state can do with the additional money generated by the 4 percent general excise tax on the recent high gas prices.

Under the price caps for this week, the maximum price at which wholesalers can sell to retailers is 50 cents lower than last week.

But prices still varied widely yesterday, with differences as much as 53 cents a gallon at stations within two blocks of each other along Keeaumoku Street in Honolulu: from $3.63 at a Chevron station on Beretania Street to $3.10 at an independent Cosmo station along King Street.

Such variances at the beginning of this week were expected. Analysts predicted consumers would put off buying gas in anticipation of lower prices, leaving many dealers holding more expensive gasoline bought last week.

As old supply is sold off, prices are expected to drop on a wider basis because stations would be able to pass along to consumers their savings from wholesale gas purchases.

Supporters of the law say this creates competition unlike Hawaii has ever seen before and allows consumers to shop around for the best price. Critics say the law has altered buying habits of consumers and brought volatility to the market.

Barney Robinson, who operates Chevron stations in Kahala and along Nimitz Highway near the airport, said both locations were "ghost towns" over the weekend, leaving him with 40,000 gallons of gas purchased last week, an amount he called "a little higher than normal."

"I was wanting to delay (lowering prices), but market forces didn't allow me to," he said.

Regular unleaded was selling at both locations yesterday for $3.19 a gallon. At Kahala Shell, across the street from Robinson's Chevron station there, the cost was $3.12 a gallon.

"I now have 40,000 gallons of inventory that I bought at the higher price, now I'm selling it 50 cents a gallon less than what I bought it," Robinson said. "I'm taking a $20,000 hit."

The loss is partly offset, he said, because when the first price caps took effect, they were higher than prices at the time. That allowed him and other retailers to charge higher prices for gas they bought at lower prices, before the higher price caps took effect. "We went up right away because we knew we would need savings for the day when we would be upside down, like this week," he said.

Wholesale price caps could go lower tomorrow, when the Public Utilities Commission sets the caps for next week. Since hitting a record high $3.06 a gallon on Sept. 5, the national retail average has steadily declined to yesterday's listing of $2.81 a gallon, according to AAA's Fuel Gauge Report.

Because the price caps are based on an average of prices in the Gulf Coast, New York and Los Angeles from the five business days leading up to the weekly Wednesday publishing date, Hawaii prices have been slower to match the downward trend nationwide.

Yesterday, Hawaii's statewide average of $3.68 a gallon was 60 cents higher than the next highest price, $3.08 in Washington, D.C., and New York, according to AAA.

The average in Honolulu was at a record $3.60 yesterday. Prices in Hilo ($3.65) and Wailuku ($3.90) were both down from record highs set Saturday ($3.77 and $3.93, respectively).

Lingle said she is still examining if anything can be done to lower taxes on gasoline. Last week, the governor said she was looking at the possibility of suspending the 4 percent general excise tax on gasoline.

Lingle said yesterday, "We just realized a huge windfall over the past 20 days now, and it will continue to be a windfall going forward, so we will talk to the Legislature about that."

GAS CAP HELP How to contact the state about Hawaii's gas cap law: Public Utilities Commission www.hawaii.gov/budget/puc/gaspricecaps Commerce and Consumer Affairs www.gascap.hawaii.gov Hotlines for consumers: 586-2769, on Oahu; (800) 830-4295, toll-free, from neighbor islands. Business, Economic Development & Tourism www.hawaii.gov/dbedt/ert/gasoline/gasoline.html Hotline for owners and operators of gas stations: 586-2752 E-mail: gasoline@dbedt.hawaii.gov AAA Fuel Gauge Report: www.fuelgaugereport.com

Kim proposes
free bus rides

The Big Isle mayor cites high
gas prices and clogged roads

HILO » In what he calls "an unprecedented initiative," Big Island Mayor Harry Kim is proposing to make all rides on the county's Hele On bus system free.

Two routes, one each in West and East Hawaii, are already free and have more than doubled their ridership, Kim said in a letter to County Council Chairman Stacy Higa yesterday.

Starting Oct. 1, Kim will use his administrative authority to make all routes free for 90 days.

Kim's announcement yesterday included a bill for Council consideration that would make the no-fare system permanent.

As reasoning for the proposal, Kim cited not only rising gasoline prices, but also growing highway congestion, a problem so acute in some areas of West Hawaii that Kim has imposed a near moratorium on new construction in the area immediately north of Kailua-Kona.

Higa's immediate reaction was cautious. "My only concern is the long-term effects. I'm going to be worried about that," he said.

Higa said he was not expressing opposition, but he wanted to know the costs associated with the idea.

A statement from Kim said the cost would be $25,000 a month, which will be paid by county and federal sources.

"We are confident at this time that the lost revenues can be absorbed without fiscal difficulty by the county's budget," Kim said in his letter to Higa.

The bus system's budget hovered at about $1.8 million per year previously, then jumped to $5.5 million this fiscal year with the addition of county highway money and a federal grant to purchase new equipment.

Ridership is in the range of 350,000 per year, with 15 percent growth in the 12 months that ended in July compared with the prior 12 months, said transit manager Tom Brown.

The county began free bus rides late last year with two "Kokua Zones," one from the Ocean View residential area south of Kona to resort jobs in South Kohala, 80 miles to the north, and a 17-mile route from Pahoa to Hilo.

Extension of free rides to one route alone, from Hilo to the South Kohala resorts, will save riders about $100 a month, Kim said.