Oahu’s gas-
price war stalls

Some Arco stations raise
prices just weeks after
entering market

By Rob Perez
Star-Bulletin

Some of Oahu's Arco gas stations, which grabbed headlines earlier this month by entering the market with the island's lowest prices, already are raising them.

At least three Arco stations that two weeks ago were charging $1.399 a gallon for regular unleaded - at the time Oahu's lowest price - have bumped that by 4 to 6 cents a gallon.

This morning the Arco stations on Farrington Highway in Maili and on North School Street in Kalihi posted regular unleaded prices of $1.439. A downtown station on Vineyard Boulevard was even higher at $1.459.

When BC Oil Ventures began converting the island's Texaco stations to Arcos on March 10, company President Hani Baskaron said there would be no question the stations that BC Oil runs - as opposed to those operated by independent dealers - would have the lowest prices among the major oil companies on Oahu.

But today a Maili 76 station and a Kalihi Chevron station, both just down the street from the respective BC Oil-run Arco stations, are charging lower prices. The 76 was selling regular unleaded at $1.399 a gallon; the Chevron at $1.419.

A BC Oil spokesman this morning said company officials were off-island and not available for comment.

Arco's entry into the Oahu market sparked a slew of competitors to lower prices, one to as low as $1.369, triggering talk of a price war. Chevron Corp., the state's leader in the gasoline market, only two days ago lowered its wholesale price to dealers by 2 cents a gallon, the company's second 2-cent drop since Arco hit the streets.

But some dealers speculated Arco would start raising prices after the publicity subsided.

The price hikes come amid a dramatic jump in so-called spot market prices for bulk purchases of gasoline on the West Coast.

Oil supply agreements, like the one BC Oil has with Chevron, often are pegged to the spot market.

Since Arco's entry, the West Coast spot price has jumped more than 20 cents a gallon, triggering similar spikes in pump prices in some West Coast markets.

The San Francisco Chronicle today reported that prices there could jump to $2 a gallon from about $1.40 because of two Bay Area refinery disasters and rising crude oil prices.

The BC Oil spokesman couldn't say whether the Arco increases were due to the rise in West Coast prices.

Baskaron, however, told reporters earlier this month that the company's ability to underprice the major oil companies was due in part to BC Oil not having a national credit card program.

Such programs can add several cents to a gallon price.

John Mayo, president of Lex Brodie's Tire Co., was among those who predicted that the Arco stations wouldn't stay at $1.399 for long and therefore wasn't surprised by the latest developments.

"If crude starts going up, it can't mean lower (gas) prices," Mayo said.

He expects other gas companies to follow suit by eventually raising their pump prices as well.

His own Kakaako station this week stopped selling gas at $1.369, Oahu's lowest price. Because the self-serve pump the station was using for the cheap gas couldn't take credit cards, the company decided to discontinue using it, Mayo said.

But Lex Brodie's lowered the $1.429 price at its partial-service pumps to $1.399.

Not all Arco stations have raised prices. Some dealer-run stations, which are free to set their own prices, actually have lowered them a few cents the past two weeks.