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By Kathryn Bender, Star-Bulletin
Hawaii customers, such as at the 76 service station on
Keeaumoku Street, are paying more to fill up their tanks.

Isle gas prices
rev up again

A fourth increase this month
has brought the cost for regular
unleaded to close to
$1.60 a gallon

Weekly gasoline price report

By Rob Perez
Star-Bulletin

Chevron Corp., the gasoline industry leader in Hawaii, has raised wholesale prices to Oahu dealers for the fourth time this month, charging more than $1 a gallon for regular unleaded for the first time since late 1996.

Many Chevron dealers passed along yesterday's 3-cents-a-gallon increase to consumers, bringing their self-serve regular unleaded pump prices close to $1.60. As recently as last summer, those prices had dropped below $1.40 at some stations. But since November, Chevron -- historically the price pacesetter in the state -- has raised its wholesale price seven times, including the four this month, each time adding 3 cents per gallon. The latest hike brought the Oahu dealer's tab, excluding taxes, to $1.01 -- the highest level since November 1996.

The increases have come amid dramatic price spikes for crude oil, which recently topped $30 a barrel for the first time since 1991. President Clinton said today that he may tap the nation's supply of emergency oil if other options fail to reduce prices. Those options include an apparent willingness by OPEC nations to boost oil production, thereby lowering prices.

Higher crude costs and strong demand have pushed the average U.S. gas price, including all grades and taxes, to $1.4713 on Friday, the highest level ever, according to the Lundberg Survey.

Since November, Honolulu prices for regular unleaded have risen at a slightly faster pace than the national average. Based on a weekly Star-Bulletin survey of six central Honolulu stations, local pump prices have risen 14.7 percent since early November, compared with a 13.6 percent jump nationally for regular unleaded.

Until last year, Oahu prices generally have been quick to go up when oil prices increased but slow to fall when crude costs dropped. But that trend didn't hold in 1999. Oahu prices fell even as higher crude prices led to surging retail gas prices across the country. Last year was the first full year since the state in October 1998 filed a $2 billion antitrust lawsuit against Hawaii's oil companies, accusing them of conspiring to keep prices artificially high. The companies deny the allegations.

Also in 1999, B.C. Oil entered the Oahu market, overseeing nearly 30 Arco stations. Some of those stations initially offered among the lowest prices on the island.

The lawsuit, which goes to trial next year, and the Arco competition were factors in keeping Honolulu prices down in 1999, according to people inside and outside the industry.

But now that B.C. Oil has established its presence and is not as aggressive with pricing, the market is returning to more traditional pricing patterns, several dealers said. "We bit the bullet and stayed with them," said Barnaby Robinson, who operates two Chevron stations. "Now the honeymoon is over."

Albert Chee Jr., a Chevron spokesman, said market forces dictate pricing, and the local market seems more receptive to increases so far this year. "I guess consumers are willing to pay," he said.

While the gap between Honolulu and mainland prices has narrowed to unprecedented levels, consumers should watch to see if local prices start falling when mainland levels do, dealers said.

Gail Au, an Oahu 76 dealer for the past 25 years, isn't counting on that. Au predicts local prices will keep rising, perhaps reaching $1.90 a gallon by year-end. "We're heading for the same quagmire. Hawaii again will have the highest prices in the nation," Au said.

On the neighbor islands, some motorists already are paying nearly $1.90 a gallon -- or even more -- in the pricier markets. In Kailua-Kona, a Shell station yesterday was charging $1.889 for self-serve regular unleaded. Elsewhere on the Big Island, a Chevron station in Waikoloa was charging $1.919.

On Molokai, customers at Maunaloa Gas Station paid $1.939.

One reason retail prices are high in Hawaii is the level of taxes. About 55 cents of the retail price represents federal, state and local taxes, the highest tax burden of any state in the country, according to the American Petroleum Institute, an industry trade group.

That burden, however, hasn't changed on Oahu in years.