Prices may
go up despite
isle gas war

An increase in oil costs and
higher mainland rates could
reverse the recent downward trend

By Rob Perez
Star-Bulletin

Local gas prices in some areas are continuing to fall since Arco came to town last week, with regular unleaded selling for as low as $1.36 a gallon at one station.

But some in the industry say the benefit may be short-lived. Hawaii prices, they say, eventually should creep up, reflecting the increase in oil prices and mainland pump prices in recent weeks.

The U.S. Department of Energy said Monday that the national retail average for regular unleaded rose to 92.1 cents, the second consecutive weekly increase.

For now, however, isle consumers are seeing the lowest pump prices in years, though still way above the mainland average.

At Lex Brodie's Tire Co. in Kakaako, self-serve regular unleaded is selling for $1.369 a gallon, the lowest price on Oahu.

Lex Brodie's temporarily was knocked from its perch as the state's low-price leader when Arco hit the market last week. A few Arco stations priced their regular unleaded at $1.399 a gallon, besting Lex Brodie's $1.429 and prompting other competitors to lower prices.

Lex Brodie's president John Mayo responded Monday by activating an unused bay of pumps for self-serve gasoline -- employees pump the gas at the other bays -- and underpricing the Arco stations.

The company was able to knock 6 cents from its regular price without affecting profit margins because not using employees to operate the pumps saves about 6 cents per gallon, Mayo said.

At $1.369, however, the company isn't making money, he said. "It's out there as a loss leader."

Chevron Corp., the state's market leader, likewise has reacted to the heightened competition.

The company over the weekend lowered wholesale prices to its dealers by 2 cents a gallon.

"We're just really responding to market conditions here, as we always do," said Chevron spokesman Albert Chee Jr.

The lower wholesale price helps ease the sting for George Williamson, owner of Koko's Island Chevron in Hawaii Kai.

On Friday, Williamson lowered his regular unleaded price by 6 cents a gallon to $1.439 -- the lowest Chevron price on Oahu.

Williamson said he lowered his price to his cost to protect market share. Nearby competitors have reduced their prices to as low as $1.409 since the island's Texaco stations began changing to Arco.

"We intend to fight no matter what it takes," Williamson said.