O'ahu gasoline prices at the pump could drop below $2.90 for a gallon of regular next week as a result of a reduction in the state wholesale price cap.

The state Public Utilities Commission yesterday set the maximum pre-tax wholesale price for regular on O'ahu at $2.0954, or almost 12 cents lower than a week earlier, when rising gasoline production on the Mainland led to a 44-cent plunge in the gas price cap from the previous week. The new cap goes into effect on Monday.

Drivers could see pump prices fall below $2.90 for a gallon of regular on O'ahu after reaching as high as $3.59 last month. Retail prices for gasoline in Honolulu averaged $3.37 a gallon Tuesday, or 47 percent higher than a year earlier, according to the AAA's Daily Fuel Gauge report.

"If it's cheaper, it's better," said Micah Leao, 26, who commutes daily from Wai'anae to a job at Century Computers at Restaurant Row. Leao said it cost him $45 on Sunday to fill up his Nissan Maxima and he was looking forward to paying less at the pump.

Hawai'i's gas cap law, the only one in the U.S., took effect Sept. 1 and is based on prices in Los Angeles, the Gulf Coast and New York. Lawmakers enacted the pricing limit to force local prices to track more closely to what's paid on the Mainland.

The cap limits only wholesale prices and doesn't require gasoline station owners to raise or lower their retail prices.

The state has the highest gasoline prices in the U.S.

The national prices averaged $2.72 for a gallon of regular — 65 cents less than Honolulu's average.