State enjoys solo ride on gas
As gasoline costs go up across the nation, an expected tax cut could lower them in Hawaii
The mainland average price for gasoline has set a new record almost daily, but Hawaii's statewide average of $3.38 a gallon is well below the post-Hurricane Katrina record of $3.68.
While some are forecasting even higher prices on the mainland, Hawaii's prices are expected to come down if Gov. Linda Lingle signs a bill restoring a general excise tax exemption on ethanol-blended fuel. Lingle has supported the GET forgiveness in the past.
The cut is estimated at 10 to 14 cents, a dip that would drop Hawaii's statewide average from fourth highest in the country to 13th.
A look at the highest and lowest prices for self-serve, regular unleaded gasoline. The national average yesterday was a record-high $3.11 per gallon.
South Carolina $2.86
New Jersey $2.90
Paul Brewbaker, chief economist for Bank of Hawaii, has a hard time predicting how high Hawaii's pump prices might get this summer. "It all depends on what's going on in any given day," he said.
Recent mainland increases have been blamed on refinery outages that have led to supply concerns ahead of the heavy summer driving season.
Hawaii has been insulated from spikes caused by such outages, but prices have gone up. One industry spokesman says a key factor is the volatile pricing of crude oil in Asia, a source for much of the state's crude.
While mainland pump prices are setting new record highs every day, Hawaii's average of $3.38 a gallon is still a far cry from the record $3.68 set in the weeks following Hurricane Katrina in September 2005.
One station in San Francisco was selling regular unleaded for $4.33 a gallon, while rival stations in northwestern Chicago were competing at $3.99, according to gasbuddy.com, a Web site that allows consumers to post prices online.
The highest prices reported in Hawaii yesterday were $3.75 a gallon on Maui, still below the island's post-Katrina record average of $3.92.
Skeptics might say it is only a matter of time before Hawaii's prices follow suit and shatter records, but that might not be the case this year, according to some analysts.
"At the moment we're not suffering from the same kind of refining issues as they are on the mainland," said Paul Brewbaker, chief economist at Bank of Hawaii. "Oil prices haven't changed all that much, and so I don't see a real strong argument for why we should see significantly higher gas prices in Hawaii."
Additionally, consumers are likely to see savings anywhere from 10 to 14 cents a gallon if Gov. Linda Lingle approves a bill restoring a general excise tax exemption on ethanol-blended gas. Lingle has said she is studying all proposals approved by the Legislature, but she has supported the GET forgiveness in the past.
CINDY ELLEN RUSSELL / CRUSSELL@STARBULLETIN.COM
This sign showed gas prices yesterday at the Tesoro gas mart at South King and Cooke streets. The highest price reported in Hawaii yesterday was $3.75 a gallon on Maui. CLICK FOR LARGE
At current prices a 14-cent dip in the statewide average would drop Hawaii from fourth highest in the country to 13th, according to AAA's Fuel Gauge Report.
The national average is at a record-high $3.11, about a quarter more than a month ago and up 79 cents since Jan. 1. While Hawaii's statewide average has gone up 29 cents in the last month, the increase since Jan. 1 has been 55 cents.
In the past, Hawaii prices have typically followed mainland trends, though they usually increase at a faster rate.
What is making the difference now?
"What's happening on the mainland has more to do with refining and distribution, and less to do with crude oil," said Brewbaker.
Mainland prices have shot up due to ongoing concerns that refiners are not making enough gasoline to meet peak summer driving demand. The gasoline shortage is due to a number of unexpected refinery outages this spring, and continued strong consumer demand -- despite rising prices.
Some analysts say the outages are the result of refineries having to work extra over the past year and a half to make up for the loss of output caused when Katrina and other storms shut down virtually all Gulf Coast oil operations for several weeks.
Those refineries were unable to stick to their regular maintenance schedules and are now paying for it, according to Brewbaker.
"Here in Hawaii, our refineries are just fine," he said.
But that does not mean Hawaii is insulated from price spikes.
Refiners say one of the reasons behind Hawaii's recent rise in prices is the cost of crude oil from Asia, from where much of Hawaii refiners' stocks come.
Crude oil on the New York Mercantile Exchange has traded between $60 and $65 a barrel in recent months. In Indonesia, where Chevron secures much of its oil, the weekly average has been between $65 and $69 a barrel since April, according to figures posted by the U.S. Energy Information Administration.
"Quite frankly, the crudes that we run in Hawaii that emanate in the Pacific Rim are not stable," said Albert Chee, a spokesman for Chevron Hawaii. "The benchmark crudes for the Pacific Rim have actually increased on the order of 25 to 30 percent since January."
Those prices might not necessarily come down as the economies of Asia, most notably China, continue their rapid growth and demand for oil, Chee said.
Where Hawaii's prices ultimately wind up is anybody's guess, but Brewbaker, for one, does not expect prices to have a significant impact on consumer behavior.
"It's pretty clear to anybody watching this that gas at $2 a gallon or $3 a gallon doesn't really matter much to most drivers," he said. "It clearly is burdensome on lower-income households, but everybody seems to have made the adjustments they needed to make."
The Associated Press contributed to this report.