Gas price decline coming to end
A winter storm could raise demand for fuel in markets used to set cost ceilings in Hawaii
WHILE THE MAXIMUM price for wholesale gas in Hawaii is expected to decline for a seventh consecutive week, fuel prices nationwide might start rising again.
That could mean a corresponding rise in Hawaii prices.
Next week's price caps on wholesale gasoline are expected to drop by about 2 cents, according to preliminary estimates by the Star-Bulletin. The maximum price at which gas can be sold at wholesale already has dropped 88 cents since Oct. 17.
However, energy prices began rising yesterday after a winter storm forecast for the Northeast prompted speculation that prices might have bottomed out following recent declines.
So far this winter, mild weather has led to a steady drop in oil and gas prices since September, when prices peaked following Hurricane Katrina. Recent government reports also indicate the nation's reserves have been growing while demand has tapered.
But analysts remain mixed on whether global production capacity can keep pace with an expected rise in heating oil demand this winter, particularly with forecasts for an approaching cold front that could hammer the northeastern United States, one of the world's key energy markets.
"I think people are starting to realize we might actually have a winter," said Phil Flynn, an analyst with Alaron Trading Corp. in Chicago. "Despite the fact we have ample crude supplies, distillate supplies are low for this time of the year." Distillates are refined crude oil products used by consumers, such as heating oil and gasoline.
RISING fuel prices across the mainland have a direct influence on Hawaii's wholesale caps. The price ceilings are tied to an average of spot prices for wholesale gas in the Gulf Coast, New York and Los Angeles.
Spot prices in those markets have remained relatively stable, fluctuating by only a few cents since last Wednesday.
The Star-Bulletin's price cap estimate is based on a four-day average of spot wholesale prices listed by Bloomberg News Service for the three target markets.
Price caps calculated by the Public Utilities Commission are posted on Wednesdays using an average of spot prices from the five previous business days listed by the Oil Price Information Service. The Star-Bulletin's estimates have varied from the PUC's actual price cap by as little as a fraction of a cent and by as much as 5 cents.
The Associated Press contributed to this report.