RICHARD WALKER / RWALKER@STARBULLETIN.COM Costco Wholesale Club in Iwilei has expanded its hours to handle increased traffic at the pumps.

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Gas prices
rise slowly on
initial day of cap

Supporters say the law
shielded Hawaii from
the effects of Katrina

The first day of Hawaii's gas cap brought moderate increases at the pumps, political leafleting, and praise from supporters who pointed to skyrocketing fuel costs and shortages on the mainland as evidence of the law's benefit.

"I think that people (in Hawaii) are somewhat cushioned from the disaster from Hurricane Katrina," said Frank Young, a member of the advocacy group Citizens Against Gasoline Price Gouging. "Because of the cap, we haven't felt the full brunt of what the mainland has felt.

"Next week, yeah, we're going to see a price increase, but it's not going to be of the magnitude that the mainland has felt."

Fuel costs are at record highs after Katrina shut down nine Gulf Coast refineries, disrupted gasoline pipelines to the Midwest and East, and stopped 90 percent of the oil production in the Gulf of Mexico.

In Hawaii, motorists saw moderate increases as the state's one-of-a-kind gasoline price cap law took effect yesterday.

The law requires the Public Utilities Commission to set a weekly maximum price at which wholesale gasoline can be sold. The price cap is based on the weekday average of spot prices in the Gulf Coast, New York and Los Angeles.

The current price caps were set Aug. 24, before Hurricane Katrina made landfall, and resulted in gas pump increases of about a nickel in many areas of Oahu.

Along Keeaumoku Street in Makiki, prices at three gas stations ranged from $2.85 to $2.89 a gallon for regular unleaded. In Laie, prices at some stations were 2 cents to 3 cents higher than the day before.

Some of the highest prices were on Maui, where prices in Kihei were pushing $3.20 a gallon yesterday, according to Hawaiigasprices.com, a Web site that allows consumers to report prices.

At Costco in Iwilei, where the line of cars stretched out to Dillingham Boulevard on Tuesday night and yesterday morning, regular unleaded was selling for $2.65 a gallon, up 6 cents from the previous day.

Statewide, the average price for regular unleaded was at a record $2.93 a gallon yesterday, according to AAA's Fuel Gauge Report, which bases its survey on transactions from the previous day. The national average was at a record $2.68, up 7 cents from the previous day.

Nationwide, high gas costs prompted thousands of complaints to federal officials about alleged price gouging and demands by some members of Congress for an investigation into gasoline markets.

Prices jumped 35 cents to 50 cents a gallon overnight in some areas, pushing costs to well over $3 a gallon. One station in Georgia briefly charged $6 a gallon when competitors ran out of gas.

Higher prices could be on the way for Hawaii: The wholesale cap for next week is 27 cents higher than the one that covers prices through Sunday.

If wholesalers charge up to the maximum allowed and retailers maintain their usual markups, motorists could be looking at prices of about $3.15 a gallon for regular unleaded on Oahu, with higher costs on neighbor islands.

Gov. Linda Lingle has urged the state's two refiners to refrain from charging at the maximum.

For competitive reasons, Chevron USA Inc. and Tesoro Hawaii Corp. do not reveal pricing information, but analysts expect they will charge up to the cap limit to make up for times in the future when they might be forced to sell at lower prices.

Chevron spokesman Albert Chee in Honolulu said the company reviewed Lingle's request, but added that market forces ultimately determine prices.

Young said he does not expect increases to hit all at once, noting that stations buying gas this week will carry that inventory into the week.

"You're probably going to start seeing it (price increases) trickling in Tuesday, Wednesday and Thursday," he said. "Every retailer is going to do things differently."

Despite the higher prices and the potential for another increase next week, House Majority Leader Marcus Oshiro (D, Wahiawa-Poamoho) urged consumers not to alter their fueling habits.

"There's no need to hoard, there's no need to purchase more than necessary," Oshiro said. "There is no shortage in Hawaii like they're facing now in the Gulf states or on the mainland."

He said supporters continue to stand by the law, noting that once prices in the Gulf stabilize, so, too, should Hawaii prices.

"No one predicted the effects of Hurricane Katrina and how it would have such a great impact on the whole nation and the price of gasoline," he said. "We still stand by our gas cap that, but for this disaster, our gas cap would have enabled our consumers here to get parity with mainland prices and would actually see us address the high cost of gasoline."

Some House Republicans lined the sidewalk at Costco yesterday handing out fliers criticizing the gas cap and listing the price increase that occurred.

Critics say the cap ties Hawaii's prices to volatile mainland markets and that without it, prices would not be as directly affected and immediately as they are now.

"We're here to educate," said House Minority Leader Lynn Finnegan (R, Mapunapuna-Foster Village). "I think our Democrat legislators knew a lot of the consequences and the huge risks that were being taken, and they went and let it happen anyway."

Oshiro called the leafleting a "publicity stunt."

"On the first day of the gas law they seem hellbent on promoting fear, promoting a run on gas and creating all this hysteria," he said.

Lex Brodie’s, Costco
offer price relief

While supporters and opponents of the gas-price cap argue over whether the measure will benefit Hawaii's consumers, at least two companies are taking steps on their own to try to help.

Lex Brodie's Tire Co. plans to offer the lowest prices on gasoline today at its locations on Queen Street in Kakaako and Farrington Highway in Waipahu.

Marketing director Bill Gray said he plans to set the price this morning, after assessing prices of competitors.

The sale is scheduled to run from 5 a.m. until closing, "or until we run out of gas," Gray said. Stations are accepting only cash for the promotion, in an effort to keep lines moving.

Gray said the stores have hired off-duty police officers to control traffic and lines that are expected. Depending on how things go, Lex Brodie's might consider doing the "Fast Friday" promotion more often, Gray said.

Meanwhile, Costco Wholesale Club in Iwilei, which typically has some of the lowest prices on gasoline, has expanded its hours to handle increased traffic that has resulted from higher gas prices.

The store is now opening at 4 a.m., a half-hour earlier than normal. Closing hours remain the same at 10:30 p.m. on weekdays and 8:30 p.m. on weekends.

Robert Loomis, general manager of the Iwilei store, said that in the past, the store had periods when gas buying would slow down.

"Is there ever a lull now? No," he said yesterday.

Regular unleaded was being sold at $2.65 a gallon yesterday at Costco and $2.84 a gallon at Lex Brodie's.

The average price for regular unleaded gasoline in Honolulu was a record $2.86 a gallon yesterday, according to AAA's Fuel Gauge Report. The national average was at a record high $2.68, the auto club said.