Wintry weather likely to raise isle gas prices
A 5-cent increase for wholesale gas is expected next week
Hawaii's price caps on wholesale gasoline are expected to increase a few cents next week as forecasts of wintry weather in the northeastern United States drove energy prices up in key mainland markets.
An increase would mark the first time since mid-October that caps were set higher in successive weeks. Including caps that took effect yesterday, the maximum price at which wholesale gas can be sold in Hawaii has fallen 90 cents since Oct. 17.
By Monday the price caps are expected to increase by about 5 cents, according to preliminary calculations by the Star-Bulletin. Next week's caps will be published tomorrow by the Public Utilities Commission.
Assuming wholesalers charge the maximum allowed and dealers tack on a markup of 12 cents, the price for regular unleaded on Oahu is projected to cost about $2.50 a gallon, which would be the cheapest in the islands. The highest price for regular would be about $2.87 a gallon on Lanai, while the statewide average could go to about $2.67.
Hawaii's statewide average for regular unleaded was $2.66 a gallon yesterday, 54 cents above the national average, according to AAA's Fuel Gauge Report. The auto club bases its survey on credit-card transactions from the previous day at more than 85,000 self-service stations nationwide, including 222 in Hawaii.
Actual prices on Oahu ranged from $2.51 a gallon by Kahala Mall to $2.59 a gallon along Waialae Avenue in Kaimuki, while prices at Lex Brodie's in Kakaako and Costco Wholesale Club in Iwilei -- typically among the lowest in Honolulu -- dipped below $2.50.
Based on past trends, prices at the pump are likely to reflect the 5-cent increase in the price caps almost immediately.
While wholesale prices are kept confidential for competitive reasons, analysts have said refiners appeared to charge up to the cap limit during previous increases to make up for times when the cap might force them to charge lower than their actual refining costs.
However, when the caps have decreased, pump prices have been slower to follow. Analysts have said this is largely because some dealers are forced to sell off gas that was bought at a higher price.
The PUC has asked oil companies to submit detailed price reports each month to see how the industry is adapting to the 3-month-old law and to determine if any changes need to be made to the price-cap formula. There is no timetable for when any recommendations might be made.
Hawaii's price cap is based on an average of spot wholesale prices in the Gulf of Mexico, New York and Los Angeles. Prices in those markets track closely to crude oil.
Crude-oil prices spiked to settle near $60 a barrel yesterday amid reports that a snowstorm would hit the U.S. Northeast, the world's largest heating-fuel market, and boost demand for crude oil and natural gas.
Heavy snow had reached Washington, D.C., at the close of trading, and forecasters said the season's first big snowstorm would head north through the Mid-Atlantic states to New England by today.
"The bulls are back in the market with just a little bit of cold weather," said energy analyst Victor Shum, of Purvin & Gertz in Singapore.
Analysts say overall sentiment of energy markets right now is bullish, especially as oil capacity and production remain strained while U.S. economic indicators have been suggesting that U.S. oil demand will jump.
Crude futures are about 16 percent below their all-time high of $70.85 in late August after Hurricane Katrina battered the Gulf Coast.
Star-Bulletin estimates are based on a four-day average of prices listed by Bloomberg News Service. The PUC calculates the caps based on a five-day average of prices listed by the Oil Price Information Service. Projections have varied by as little as a fraction of a cent to as much as 5 cents.
The Associated Press contributed to this report.A 5-cent increase for wholesale gas is expected next week
By B.J. Reyes
bjreyes@starbulletin.com
Hawaii's price caps on wholesale gasoline are expected to increase a few cents next week as forecasts of wintry weather in the northeastern United States drove energy prices up in key mainland markets.
An increase would mark the first time since mid-October that caps were set higher in successive weeks. Including caps that took effect yesterday, the maximum price at which wholesale gas can be sold in Hawaii has fallen 90 cents since Oct. 17.
By Monday the price caps are expected to increase by about 5 cents, according to preliminary calculations by the Star-Bulletin. Next week's caps will be published tomorrow by the Public Utilities Commission.
Assuming wholesalers charge the maximum allowed and dealers tack on a markup of 12 cents, the price for regular unleaded on Oahu is projected to cost about $2.50 a gallon, which would be the cheapest in the islands. The highest price for regular would be about $2.87 a gallon on Lanai, while the statewide average could go to about $2.67.
Hawaii's statewide average for regular unleaded was $2.66 a gallon yesterday, 54 cents above the national average, according to AAA's Fuel Gauge Report. The auto club bases its survey on credit-card transactions from the previous day at more than 85,000 self-service stations nationwide, including 222 in Hawaii.
Actual prices on Oahu ranged from $2.51 a gallon by Kahala Mall to $2.59 a gallon along Waialae Avenue in Kaimuki, while prices at Lex Brodie's in Kakaako and Costco Wholesale Club in Iwilei -- typically among the lowest in Honolulu -- dipped below $2.50.
Based on past trends, prices at the pump are likely to reflect the 5-cent increase in the price caps almost immediately.
While wholesale prices are kept confidential for competitive reasons, analysts have said refiners appeared to charge up to the cap limit during previous increases to make up for times when the cap might force them to charge lower than their actual refining costs.
However, when the caps have decreased, pump prices have been slower to follow. Analysts have said this is largely because some dealers are forced to sell off gas that was bought at a higher price.
The PUC has asked oil companies to submit detailed price reports each month to see how the industry is adapting to the 3-month-old law and to determine if any changes need to be made to the price-cap formula. There is no timetable for when any recommendations might be made.
Hawaii's price cap is based on an average of spot wholesale prices in the Gulf of Mexico, New York and Los Angeles. Prices in those markets track closely to crude oil.
Crude-oil prices spiked to settle near $60 a barrel yesterday amid reports that a snowstorm would hit the U.S. Northeast, the world's largest heating-fuel market, and boost demand for crude oil and natural gas.
Heavy snow had reached Washington, D.C., at the close of trading, and forecasters said the season's first big snowstorm would head north through the Mid-Atlantic states to New England by today.
"The bulls are back in the market with just a little bit of cold weather," said energy analyst Victor Shum, of Purvin & Gertz in Singapore.
Analysts say overall sentiment of energy markets right now is bullish, especially as oil capacity and production remain strained while U.S. economic indicators have been suggesting that U.S. oil demand will jump.
Crude futures are about 16 percent below their all-time high of $70.85 in late August after Hurricane Katrina battered the Gulf Coast.
Star-Bulletin estimates are based on a four-day average of prices listed by Bloomberg News Service. The PUC calculates the caps based on a five-day average of prices listed by the Oil Price Information Service. Projections have varied by as little as a fraction of a cent to as much as 5 cents.
The Associated Press contributed to this report.