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The Honolulu Advertiser
Posted on: Wednesday, October 19, 2005

Pumps tapped dry

 •  Gas-skimpers getting stranded on road

By Greg Wiles
Advertiser Staff Writer

Lex Brodie's in Kaka'ako was among the O'ahu gas stations that ran out of fuel yesterday. The price at the pump dropped to $3 or less a gallon at many stations as this week's cap on wholesale cost kicked in. Next week, retail prices could drop to under $2.90 a gallon.

JEFF WIDENER | The Honolulu Advertiser

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MORE SAVINGS AHEAD

  • Price of gas could fall another 11 cents per gallon on Monday.

  • Shop around on Monday because not all stations will lower prices immediately.

  • For low prices, check out gasbuddy.com and the Best Gas Prices forum at the.honoluluadvertiser.com/board/.

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    Several O'ahu service stations ran out of gasoline yesterday after their tanks were drained by drivers clamoring for fuel at $3 or less a gallon.

    Lex Brodie's gas station on Queen Street closed early yesterday after running out of regular- and medium-grade gasoline, while Waialae Chevron was pumped dry of regular. A Chevron station in Kane'ohe reported it ran out of medium-grade gasoline.

    "It would be like the newspaper running out of ink," said Barney Robinson, whose Chevron station in Kahala ran out of regular at 3 p.m., or about five hours before he was supposed to get his next shipment. "This is our business; you do not run out of gasoline."

    Drivers scrimped on gasoline purchases late last week knowing prices for regular, which then topped $3.40 a gallon, were set to fall. Last Wednesday the state announced the wholesale gasoline price cap would decline by 44-cents a gallon on Monday.

    Hawai'i gasoline prices are expected to slide for a second consecutive week this coming Monday when the state's wholesale price cap falls to its lowest level since the program started last month.

    Advertiser calculations show the wholesale cap will fall roughly 11 cents on Monday to $2.10 for regular on O'ahu before taxes. State officials will announce the official wholesale gasoline price cap today.

    O'ahu pump prices may dip below $2.90 a gallon depending how much of a dealer markup is added after taxes. The decline follows a 44-cent plunge in the price cap this week and is below the previous bottom of $2.16 a gallon when the price limit debuted on Sept. 1.

    The practice of announcing the next week's price on a Wednesday has led to many drivers holding off on purchases until lower prices hit on Monday. That has caused a rush to the pumps on Mondays and Tuesdays.

    Lex Brodie's ran out of regular about 2 p.m. yesterday and closed early. Manager Cooper Masani said the station was supposed to get another shipment this morning.

    At Kahala Shell, co-owner Madeleine Snow said she almost ran out of gasoline yesterday after dropping her price to $2.98 for a gallon of regular. She said that last week she had to cancel gasoline deliveries because of slow business.

    "This week I can't keep up," Snow said.

    Gasoline buying surges and shortages were forecast in August by Stillwater Associates, which had consulted with the state previously on the gas cap law.

    "There is a chance that the gasoline delivery trucks will not be able to keep up, resulting in runouts at gasoline stations," the Irvine, California-based consultant said in its report. "This will be solved over time, but will add to the cost of doing business because the companies will have to buy more trucks and hire more drivers."

    Robinson said Chevron, which prides itself on keeping station tanks full, has had more than 40 "runouts" since the gas cap law went into effect. Robinson said before the gas cap one "runout" a month was considered unacceptable.

    Robinson, who operates two Chevron stations, dropped his prices to $2.99 at his Kahala location yesterday even though he still had gas in his tanks that he bought at last week's higher rate. Robinson said he expects to lose about $15,000 selling gas below cost this week.

    Hawai'i's cap law, the only one of its kind in the nation, was enacted to make prices more closely follow changes on the Mainland. Gasoline prices on the Mainland, particularly those on the Gulf Coast, are dropping as refineries and distribution lines are repaired or restarted following hurricanes Katrina and Rita.

    Fifteen of 20 U.S. oil refineries near the Gulf of Mexico that shut down have resumed operations following the hurricanes. The five shuttered refineries account for 7.6 percent of the country's refining capacity.

    The state's wholesale price cap is computed using spot prices for gasoline in New York, the Gulf Coast and Los Angeles and an adjustment for delivery and marketing costs. The gas cap, updated once a week, limits only wholesale prices with stations being free to set their own retail prices at the pump.

    The average price in Hawai'i for a gallon of regular was $3.49 on Monday, according to the American Automobile Association's Daily Fuel Gauge Report. That compared to the national average of $2.74 a gallon.

    The Advertiser calculations of next week's price cap are based on data from Bloomberg News while the state uses figures supplied by the Oil Price Information Service.

    Bloomberg News contributed to this report.