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Hawaii gas prices
are climbing

Some dealers already have
hiked costs after wholesale prices
were raised by two oil firms

By Rob Perez
Star-Bulletin

For third time in the past several weeks, the state's leader in the gasoline market has raised prices to its Oahu dealers by 3 cents a gallon, bringing the wholesale tab to the highest level in two years.

At least one other oil company, Tosco Corp., followed Chevron Corp.'s lead yesterday and likewise raised prices to its dealers, who sell under the 76 brand.

Chevron dealers on Oahu are now paying 95 cents a gallon, excluding taxes, for regular unleaded -- the highest level since February 1998.

If dealers pass the increases to consumers, as was evident at some stations yesterday, the average Honolulu pump price for regular unleaded would top $1.50 for the first time in more than a year.

And with world oil prices breaking the $30-a-barrel level Monday for the first time in nine years, industry officials expect pump prices here and elsewhere to keep climbing.

John Mayo, president of Lex Brodie's Tire Co., which operates two service stations on Oahu, noted that profit margins for gasoline have shrunk considerably over the past year, to the point where his company is losing money on regular unleaded sales.

"You can only do that for so long," Mayo said.

Yesterday's price increase was the fifth 3-cents-a-gallon jump for Chevron dealers since November.

Chevron spokesman Albert Chee Jr. said the rise in oil prices has been a factor. But he noted that pump prices ultimately are dictated by the marketplace.

The recent price hikes are in marked contrast to what happened on Oahu in 1999.

For the first and only time over the past decade, Honolulu's average price fell during the year while national prices soared, a development that some attributed to the unusual scrutiny on local pricing.

The state in late 1998 filed a $2 billion antitrust lawsuit against the oil companies, accusing them of conspiring to keep prices artificially high. The companies denied the charges. A trial is set for early next year.

Honolulu prices for much of 1999 were comparable to or lower than prices in major West Coast markets, an unprecedented situation for local motorists.

Chevron dealer Frank Young, a critic of the oil companies, said today's wholesale prices seem fair given crude oil charges.

But Young cautioned consumers to continue scrutinizing the local market in case prices get out of whack. "Pay attention and ask why," he said.

Chevron historically has been the pacesetter for wholesale gasoline prices in Hawaii. It has roughly a third of the retail market and owns one of Oahu's two refineries.