Isle gas price dip
likely temporary

Hurricane Rita could make a
6-cent decrease short-lived

The state's wholesale gasoline price caps are expected to decline again next week, but the lower prices could be short-lived as Gulf Coast oil production suffers more disruptions from another hurricane.

Preliminary calculations by state House analysts show price caps for next week are expected to decrease by about 6 cents.

"We anticipate that prices will continue to track with the mainland and be affected by events such as this week's Hurricane Rita affecting prices in the Gulf Coast," House Majority Leader Marcus Oshiro said in a news release. "Therefore, we need to look at how the law works to help consumers over the long term."

Each Wednesday, the Public Utilities Commission sets the maximum price at which wholesale gas can be sold based on an average of spot prices in the Gulf Coast, New York and Los Angeles.

Gas prices had been going down recently, as facilities damaged by Hurricane Katrina began to recover. They began increasing again this week as a result of Hurricane Rita's threat to the Gulf Coast, analysts said.

Oil prices also rose, with crude-oil futures going above $67 a barrel earlier in the week, in part because of worries about Rita, before settling at $66.23 a barrel yesterday on the New York Mercantile Exchange. That price was below the record of $70.85 a barrel reached Aug. 30, but still more than 45 percent higher than a year ago.

Three weeks ago, Katrina forced the industry to shut down about 95 percent of oil and natural gas production and nine refineries in the Gulf Coast, which is home to about a quarter of the country's oil and natural gas production.

As of yesterday, about 58 percent of oil output in the Gulf was blocked as a result of disruptions from Rita, the U.S. Minerals Management Service said. That figure is likely to go up as energy companies pull more workers from operations in anticipation of Rita, which was forecast to make landfall by Friday or Saturday.

Agbeli Ameko, a partner with First Enercast Financial Inc., a Denver-based energy forecasting firm, said his fear is that "whatever was missed by Katrina is now going to get targeted by Rita."

Further disruptions to Gulf Coast oil production could reverse the decline in gas prices that most of the country has experienced recently.

Since hitting a record high $3.06 a gallon on Sept. 5, the national retail average for regular unleaded has steadily declined, down to $2.79 a gallon yesterday, according to AAA's Fuel Gauge Report.

Because Hawaii's price caps are based on the average of prices in the mainland markets from the five business days leading up to the weekly publishing date, isle pump prices have been slower to match the downward trend nationwide.

Yesterday, Hawaii's statewide average of $3.63 a gallon was still the highest in the country, 55 cents higher than runner-up Washington, D.C., according to AAA. Prices are expected to fall on a wider basis as stations sell off gasoline bought under last week's higher price caps.

House analysts calculated next week's baseline price at $2.03, which is 6 cents lower than this week's cap.

After taxes, assuming wholesalers charge up to the maximum allowed by the cap and retailers add a markup of 12 cents, the price of regular unleaded would be about $3.04 a gallon on Oahu, $3.20 on Maui, $3.15 on Kauai, $3.12 in Hilo and $3.14 in Kona.

There is no limit on what retailers may charge. Backers of the law say competition among stations is expected to keep prices at a fair market value.

Markups have varied, leading to a wide range of prices at stations even within a few blocks of each other. Yesterday morning, prices at three stations along Waialae Avenue near the Kahala Mall ranged from $3.11 and $3.12 to $3.19 a gallon.

Supporters of the law say it has brought competition never seen by Hawaii consumers. Opponents contend the law has affected consumer behavior and brought volatility to the market.

GAS CAP HELP How to contact the state about Hawaii's gas cap law: Public Utilities Commission www.hawaii.gov/budget/puc/gaspricecaps Commerce and Consumer Affairs www.gascap.hawaii.gov Hotlines for consumers: 586-2769, on Oahu; (800) 830-4295, toll-free, from neighbor islands. Business, Economic Development & Tourism www.hawaii.gov/dbedt/ert/gasoline/gasoline.html Hotline for owners and operators of gas stations: 586-2752 E-mail: gasoline@dbedt.hawaii.gov AAA Fuel Gauge Report: www.fuelgaugereport.com