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The Honolulu Advertiser
Posted on: Wednesday, January 4, 2006

Gasoline price may go up 12 cents

By Sean Hao
Advertiser Staff Writer

Regular gasoline prices could rise about 12 cents a gallon next week on O'ahu under Hawai'i's wholesale price cap law.

The estimated rise follows a jump in Mainland prices that serve as the basis for Hawai'i's maximum wholesale price for gasoline.

State officials will announce today the new wholesale gasoline price cap to take effect Monday. Advertiser calculations point to a nearly 12-cent rise in the cap to $1.95 a gallon for regular on O'ahu. When taxes and a 20-cent dealer markup are added, that could translate into pump prices of about $2.77 a gallon.

The nation's only gasoline price cap was not designed to lower gasoline prices, according to proponents of the Democrat-created law, but to force local prices to track more closely Mainland prices.

Since the cap took effect on Sept. 1, Hawai'i gasoline prices have been increasingly volatile, and the differences in prices between stations has become more pronounced. Drivers have had to respond by shopping around for cheaper prices and sometimes even timing their purchases to get the best deals.

At the same time, concerns that price caps would lead to dire consequences such as major gasoline shortages or the shutdown of a local refinery so far have proved unfounded.

"We haven't seen some of the adverse effects, which is good," said Maurice Kaya, chief technology officer for the Department of Business, Economic Development and Tourism, which helps monitor the caps. "At the same time I'm not sure what impact this policy will have on the long-term investments of this industry on facilities because of the uncertainty created."

Hawai'i's price-cap law sets a maximum wholesale gasoline price based on wholesale prices in Los Angeles, the Gulf Coast and New York plus an adjustment for delivery and marketing costs.

The gas cap limits only wholesale prices, so stations are free to set retail prices wherever they want.

Reach Sean Hao at shao@honoluluadvertiser.com.