"We should forget the $1.30, $1.50, $1.70 range" for gasoline in Hawai'i, he said. "That is most likely gone in the future.

"I think the baseline of two dollars plus is a reasonable assumption."

Also affecting gasoline prices, particularly on the Mainland, is a rise in the use of specialized, environmentally friendlier blends, which inhibit the free flow of gasoline between regions, Fesharaki said.

"The system has become a victim of its own goodwill in attempts to try and create a cleaner environment," he said. "That actually in my judgment is one of the most important reasons the price of oil is unlikely to come down because there are structural problems."

Those and other factors are behind Hawai'i's high gasoline prices, and not windfall profits by the local oil industry, he said.

"The prices ought to be higher (here) than the Mainland because for everything else they are," Fesharaki said. "Pretty much everything we have to buy her comes from outside and a long distance."

As for solutions to high gasoline prices, consumers can choose to buy a lower grade of gasoline, if appropriate under guidance from their auto's maker, he said. They can also make the effort to shop around for the lowest prices, he added.

Fesharaki said a pending price cap law could drive down costs, but also could force the closure of gasoline stations and one of Hawai'i's two refineries.

In the end, Hawai'i residents will need to get used to relatively higher gasoline prices, he said.

"We are where we are. If we don't like it that's tough," Fesharaki said. "We should get used to it."

However, unless prices increase substantially, they shouldn't have much effect on consumers or the economy, Fesharaki said.

"The prices going up, will it affect our way of doing things? I don't think so," he said.

Crude oil demand from China has been on the upswing since last summer, said Kang Wu, an East-West Center researcher.

At the same time, demand for crude oil by Japan should fall to normal levels this year, said the Center's Tomoko Hosoe.

Controversy surrounding falsified inspection documents in late 2002 caused Japan to temporarily shut down all 17 of its nuclear reactors. To meet its power needs, Japan stepped up purchases of specialty crude oil from Indonesia, a source for oil refined in Hawai'i.