Wholesale gas drops 4 cents
Oahu prices are likely to average $2.58 per gallon for regular
With the state's average price for regular gasoline below $3 a gallon for the first time in almost two months, most indicators show the cost is likely to stay below that mark for the near future.
Locally, next week's wholesale price caps were set 4 cents lower -- the fourth straight week that the price ceilings have declined.
Nationally, crude oil futures fell yesterday after the federal government released data that showed rising supplies of oil and gasoline.
By next week, Hawaii's price caps, which represent the maximum price at which wholesale gas can be sold, will have fallen 80 cents since Oct. 17.
Under the new caps, if wholesalers charge up to the maximum allowed, the price for regular unleaded on Oahu is projected to be about $2.58 a gallon after taxes. The highest-priced gas would be on Lanai, at $2.95 a gallon.
Estimates assume a dealer markup of 12 cents, although such charges vary among stations and are not governed by the price cap. That has led to different strategies among dealers, with some reflecting the weekly price cap changes immediately and others dropping prices at a slower rate.
Prices ranged from $2.69 and $2.71 a gallon for regular in lower Makiki to $2.72 in Kakaako. In Iwilei, Costco Wholesale Club was selling regular at $2.59 a gallon.
The declines have helped bring the statewide average below $3 a gallon for the first time since Sept. 6.
According to AAA's Fuel Gauge report, yesterday's statewide average for regular was $2.95 a gallon, down a nickel from the previous day but still 48 cents higher than the national average. The auto club bases its price survey on credit card transactions from the previous day at 222 stations statewide.
Critics say Hawaii's costs are far higher than elsewhere because the cap artificially ties prices to an average of spot prices in the Gulf Coast, New York and Los Angeles, even though the state's refiners obtain most of their crude oil from Asia and Alaska.
Supporters of the law say Hawaii's prices have traditionally been the highest in the country but now, because of the price cap law, track more closely to up and down trends in mainland prices.
Gasoline and crude oil prices across the country have steadily declined after reaching record highs following September hurricanes in the Gulf Coast which severely disrupted major Gulf Coast oil operations.
As those operations have recovered, prices have steadily declined.
In its weekly petroleum supply report, the federal Energy Information Administration said yesterday that U.S. crude inventories rose by 2.7 million barrels last week to 319.1 million barrels, or 12 percent above year-ago levels. Gasoline inventories grew by 1 million barrels to 196.9 million barrels, or 3 percent below year-ago levels.
The EIA data also showed that average daily gasoline demand over the past four weeks was 1.7 percent below year ago levels. However, the gap is narrowing because consumption has been rising week to week since the start of October.
"We're moving back into last year's range" for demand, said broker Andrew Lebow at Man Financial Inc. in New York.
Analysts remain concerned that U.S. output of oil and natural gas remains constrained by hurricane-related damage to platforms and pipelines.
The U.S. Minerals Management Service said yesterday that 64 percent of daily oil production and 50 percent of natural gas production in the Gulf of Mexico remained offline, slightly lower than Tuesday.
The Associated Press contributed to this report.