Thursday, August 19, 1999

Gasoline-Paying the Price

Oahu gas suppliers
pump up prices

Chevron boosts costs 3 cents
while BC Oil raises, then rescinds,
its 4-cent increase

By Rob Perez


Two of Oahu's major gasoline suppliers have raised their dealer wholesale prices by as much as 4 cents a gallon, and the increases already have started to show up in higher pump prices.

But one of the suppliers, BC Oil Ventures, which oversees the nearly 30 Arco stations on Oahu, yesterday afternoon notified its dealers that the company would be lowering their prices today by 4 cents a gallon -- the identical amount by which they were raised last week.

Art The notification came after a Star-Bulletin reporter told BC Oil that the newspaper would be publishing a story today about last week's increase and was seeking comment. A company official did not return the phone call.

Hawaii's market leader, Chevron Corp., also raised its prices to dealers by 3 cents a gallon yesterday.

Chevron spokesman Albert Chee Jr. declined comment on the increase.

The higher price applied to Oahu as well as neighbor island dealers.

This is only the third time this year Chevron has raised prices to its Oahu dealers, but it has lowered prices 10 times, dealers say.

Despite yesterday's increase, Chevron's dealer price on Oahu still is 6 cents lower a gallon than when the year started -- an eight-month period in which oil prices have roughly doubled.

Chevron's neighbor island dealers, however, have not enjoyed the same benefits, helping explain the growing spread between pump prices on Oahu and the other islands. The neighbor island markets are considered far less competitive than Oahu's.

Glen Konishi, a Chevron dealer on Kauai, said he did not get any of the 10 decreases that Oahu dealers got but was hit with two of the increases, including yesterday's.

His wholesale price -- before taxes -- for regular unleaded yesterday climbed to $1 a gallon, compared with 82 cents for Chevron's Oahu dealers, an 18 cents difference. In past years that spread was less than 10 cents, dealers said.

"It's bothersome," Konishi said of the growing gap. "I think it should be smaller, but that's the oil company's call."

Chevron's Chee said the neighbor islands are considered separate markets from Oahu, and price changes in either direction could be made in one but not the other. "The company responds to market forces," he said.

Konishi said he expects to raise his $1.669 pump price for regular unleaded by 3 cents in the next few days.

Oahu dealer Frank Young, who runs K&Y Chevron in Kakaako, already had raised his self-serve pump price yesterday by the 3 cents, to $1.409.

"My margins are too low. I have to pass it on," Young said.

Historically, Chevron has been the pacesetter for gas prices locally, but it wasn't clear whether other companies would match the latest increase.

Dealers at Shell and 76 stations said yesterday afternoon that their suppliers had not raised their prices. A spokesman for Tesoro Hawaii, which runs all but two of its stations statewide, declined comment.

Gail Au, a 76 dealer in Niu Valley, said he wouldn't be surprised if his supplier raises his wholesale price, noting the industry often follows Chevron's lead.

"When one guy moves, another guy follows," Au said. "It's a chain reaction right down the line."

Au yesterday was selling regular unleaded for $1.329 a gallon, one of the lowest prices on Oahu. At Lex Brodie's Tire Co. in Waipahu, the price was $1.319.

Chevron's competitors, however, don't always follow suit.

When Chevron raised its wholesale price by 3 cents in March, the major companies didn't match the move. Over the next few weeks, Chevron took back the increase and reduced prices even more.

The BC Oil increase started showing up at the pumps last week. In Makakilo, the Arco station -- run by BC Oil -- raised its regular unleaded price from $1.379 to $1.419.

Andy Pung, an Arco dealer near Diamond Head, said he and other Arco dealers are having trouble competing because their wholesale prices keep rising.

"We're not in good shape," he said before getting word of today's planned reduction.

Even with the latest increases, Oahu residents still are paying less for gas than many parts of the West Coast.

In San Francisco, for instance, regular unleaded last week hit a record average of $1.75 a gallon.

The industry has attributed the West Coast price spikes to high summer demand and reduced production because of problems at several California refineries.

Some critics say Oahu's prices have stayed down because of media attention and the $2 billion antitrust lawsuit the state filed last year against the oil companies.

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