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Gas prices near
record levels

Isle economists say the higher
costs shouldn't derail
the state's economy

By Rob Perez
Star-Bulletin

Rising at a faster clip than on the mainland, Oahu's retail gasoline prices have soared nearly 30 cents a gallon since November and are near all-time highs.

But economists say increasing fuel costs won't derail the state's modest economic recovery.

"That's not a good thing, but (the rising costs) aren't going to have a big effect on the economy," said Hawaii Pacific University economics professor Leroy Laney.

Chevron Corp., the market leader in Hawaii, yesterday raised prices to dealers by 3 cents a gallon for the seventh time this year, upping regular unleaded to a record $1.07. That topped the previous record of $1.049 from 1996.

"This is the most we've ever paid for gas," said Chevron dealer Barnaby Robinson.

The higher wholesale prices, driven in part by rising crude oil costs, have translated into near-record prices at the pump.

Whether they will continue rising is unclear. Oil prices fell about 10 percent yesterday, and some traders say the tab could get even cheaper in the months ahead after two OPEC members signaled the cartel will produce more oil.

Any relief won't come soon enough for Hawaii motorists.

Already, regular unleaded retail prices are more than $2 a gallon in at least one neighbor island market and approaching that threshold in others.

The only station on Lanai, for instance, charged $2.199 yesterday afternoon. A Tesoro Gas Express in Kailua-Kona on the Big Island charged $1.959. Customers at a Molokai station paid $1.949.

On Oahu, self-serve prices generally were in the $1.60s, although a Tesoro on the Waianae Coast -- which often has some of the state's lowest prices -- was charging $1.519.

Before yesterday's increase took effect, the price of regular unleaded in Honolulu averaged nearly $1.61 a gallon, according to a weekly Star-Bulletin survey of six Central Honolulu stations.

That's up 18 percent from November, when Oahu prices started a steady climb. By contrast, the average U.S. price for regular unleaded has risen 13.6 percent in that same period, according to the Lundberg Survey.

Today's retail levels on Oahu are approaching the island's all-time highs from the last half of 1996, when average monthly prices peaked at around $1.66 a gallon.

Even if pump prices keep climbing, Hawaii's economy isn't as energy-dependent as some mainland ones and therefore shouldn't be affected as much, economists say.

"Worse things can happen to us than oil prices doing what they're doing," Laney said.

The biggest impact probably would be felt if air fares rise dramatically because of higher fuel costs, cutting the number of visitors to the islands, said Pearl Imada Iboshi, the state's chief economist.

Whether more fuel-price increases are in the offing, however, remains to be seen. Oil prices had their biggest decline in more than a year yesterday after Iran and Saudi Arabia signaled that OPEC will produce more oil. Some traders said that action will send prices even lower in coming months. However some analysts doubt that OPEC will boost production enough to meet demand.

How to save on gasoline Scripps Howard News Service Accelerate slowly, brake gradually and avoid hard stops. Do not purchase mid-grade or premium gasoline unless it is recommended by the vehicle's manufacturer or is needed to prevent knocking in an older vehicle. Use the air conditioner only when necessary. Keep tires properly inflated. Don't let the vehicle idle for more than a minute. Combine errands into one trip. Pack lightly when traveling and avoid carrying items on the vehicle's roof. Source: Automobile Association of America.