Hawai'i fuel remains costly

By Jaymes Song
Associated Press

Although prices nationwide quickly have dropped from peak levels reached in mid-March, prices at Hawai'i pumps continue at near-record highs.

Meanwhile, the national average of $1.496 has dropped about 22 cents from its peak mark. Hawai'i's is more than 50 cents higher than the national average and the only state above $2 per gallon.

California, which has experienced a 28-cent drop from record levels, had the second-highest average ($1.897), followed by Nevada ($1.772), Alaska ($1.755) and Arizona ($1.732), according to the latest AAA survey.

Motorists in Georgia enjoyed the lowest prices in the nation at $1.301.

Jeff Spring, spokesman for the Automobile Club of Southern California, which also includes Hawai'i, said U.S. success in the war with Iraq and the drop in crude oil prices caused wholesale and retail gasoline prices to drop.

"In our view, in many parts of the country, (prices at the pump) haven't dropped as significantly as wholesale prices have dropped," Spring said. "In Hawai'i, they haven't dropped at all."

Hawai'i, which imports most of its crude oil from Alaska and Indonesia, has only two oil refineries, operated by Chevron Corp. and Tesoro Hawaii Corp. Hawai'i historically has had the highest gasoline prices in the nation, but it relinquished that title to California for a few months earlier this year.

"This is a small market with not many alternatives and not many incentives for the supplier to lower the price," said Kang Wu, an economist and energy expert at the East-West Center, the Honolulu-based policy analysis organization.

The Maui market has the highest gas prices in the nation. The average gasoline price in Wailuku was $2.274 per gallon, compared with $1.967 for Honolulu and $2.126 in Hilo, the auto club said.

ChevronTexaco spokesman Albert Chee, when asked why Hawai'i hasn't experienced a decline in gasoline prices similar to the rest of the country, said his company's goal is "to price our product in order to allow our dealers to be competitive in the market place, so we set our prices in order to accomplish that."

He said ChevronTexaco sells gasoline at wholesale prices, and the independent dealers that lease gas stations from Chevron ultimately set the price for consumers.

Chee would not comment on the wholesale price or its movement, citing company policy.

He also couldn't say whether gas prices eventually would go down.

But Wu said he believes prices eventually will come down because oil prices have dropped worldwide.

"Hawai'i may take longer, for whatever reason, but it should follow that trend," he said. "Today's international oil prices are still too high, so that gives us added reason for gas prices to come down further."

Weaker fuel demand in Asia because of SARS also should help prices come down, Wu said.

Spring said he expects island gas prices to drop because Hawai'i has closely followed nationwide price increases and decreases — with about a 30-cent difference — in the past 10 months.

The state in 1998 sued Chevron, Texaco and five other oil companies with charges of price-fixing and fraudulent concealment, seeking $2 billion in damages.

The state settled the case in March for $35 million, netting $22.5 million after court costs.