Estimate forecasts 8-cent drop in gas price

Analysts say the world market is likely to keep isle fuel costs volatile

State price caps on wholesale gasoline are expected to decrease next week, reversing a trend that saw the ceilings go up 25 cents in the first two weeks of 2006.

Price caps, which represent the maximum at which wholesale gas can be sold in Hawaii, are forecast to drop 8 cents, according to preliminary estimates by the Star-Bulletin.

The state Public Utilities Commission is scheduled to publish tomorrow morning the actual price caps for next week.

The ups and downs of the cap are likely to continue.

Analysts are watching U.S. markets closely as overseas issues lead to crude-oil price spikes in foreign markets.

In Singapore, crude-oil prices jumped early today as Iran's nuclear ambitions and an attack on an oil platform in Nigeria kept traders edgy over potential supply snags.

Hawaii's price caps are tied to spot wholesale prices in mainland markets, which rise and fall consistent with crude oil futures.

By next week, if wholesalers charged up to the maximum allowed, regular gas in Hawaii is forecast to range from $2.75 a gallon on Oahu to $3.11 a gallon on Lanai, while the statewide average could go to $2.91 a gallon.

Those prices include taxes and an assumed dealer markup of 16 cents, although such charges vary and are not governed by the price caps.

Actual gas prices on Oahu ranged yesterday from $2.51 a gallon at Costco Wholesale Club in Waipio to $2.85 at a Chevron station in Kakaako, according to Honolulugasprices.com, a site that allows the public to post prices online.

Prices elsewhere reached $3.06 a gallon in Kahului on Sunday and $2.99 a gallon in Princeville yesterday, according to a similar online listing, Hawaiigasprices.com.

With the two-week, 25-cent rise in the price caps, the statewide average was projected to reach $3 a gallon in the coming week.

Yesterday's statewide average was $2.80, up a penny from the previous day, according to AAA's Fuel Gauge Report, which bases its survey on credit card transactions from the previous day. Hawaii's average was 14 cents higher than a month ago and 48 cents higher than the national average, the auto club said.

Recent increases in the price caps were attributed to a weak U.S. dollar and foreign oil disputes that raised fears about global oil supply, driving up the price of crude oil.

Increases were offset last week by forecasts for warmer weather in the U.S. Northeast, the largest consumer of heating oil. The decrease in the demand for heating oil has driven down crude-oil prices.

The Star-Bulletin's price cap estimates are based on a four-day average of spot prices listed by Bloomberg News Service.

Benchmarks vary slightly from prices listed by the Oil Price Information Service, which the PUC uses in determining the weekly price caps. Star-Bulletin projections have varied from the actual price caps by as little as a fraction of a cent to as much as 5 cents.