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The Honolulu Advertiser
Posted on: Tuesday, September 12, 2006

Gas costs down, but Isle prices still tops

By Tara Godvin
Associated Press

Amid falling oil prices, the average retail price of a gallon of regular gasoline in the Islands has inched down nearly 10 cents over the past month.

That's the good news.

The bad news is that the same falling oil prices have prompted a 40-cent drop across the Mainland. And in some areas of Hawai'i, gas prices have increased.

Hawai'i now stands as the only state where a gallon of regular costs more than $3. At an average of $3.28 per gallon, Hawai'i's average price for regular gas is 66 cents higher than the national average, according to AAA's Fuel Gauge Report.

And fuel continues to be more expensive on the Neighbor Islands. In Hilo, Hawai'i, yesterday, the average price of a gallon of regular was $3.41, compared with $3.32 a month ago.

However, Melissa Pavlicek, a spokeswoman for the Western States Petroleum Association, said people need to take a longer view of gas price statistics because the gap between prices here and on the Mainland can be less or more.

The association was opposed to the cap on gasoline prices that had tied wholesale prices to those on the Mainland over eight months ending in May.

Pavlicek also pointed toward an Aug. 27 letter to the editor by Public Utilities Commission Chairman Carlito Caliboso in The Advertiser that indicated the gap between O'ahu and Mainland retail gas prices had narrowed since May.

The letter said before the gas cap, the difference had been about 34 cents per gallon. That popped up to 39 cents per gallon under the cap. And since the gas cap's suspension, the gap has reverted to 34 cents.

Ethanol has been another challenge for fuel companies in Hawai'i, Pavlicek said. Since April 2, state law has required that 85 percent of gasoline contain at least 10 percent ethanol.

While one of the hopes had been that the new program would bring down local prices, the cost of ethanol which currently must be imported into the state has sometimes been higher than gasoline, she said.

Tesoro Hawaii spokesman Nathan Hokama also said that there is generally a two-month lag time between when crude prices decline and prices drop in Hawai'i because the Islands don't have easy access to oil like some Mainland states. "It's not going to track exactly how it is on the Mainland," he said.

Gasoline price increases in Hawai'i may not be as similarly slow to take effect because of market conditions, including local competition between neighborhood retailers and labor costs, he said.

That explanation doesn't sit well with Frank Young, a former Chevron station dealer and member of Citizens Against Gasoline Price Gouging.

"There's never a two-month lag (when) the prices go up. ... They're talking out two sides of their mouth," he said.

Young said he wants to see Gov. Linda Lingle, who has the power to bring the gas cap back from suspension, to take some action to address the Islands' gas prices.

The state Public Utilities Commission is continuing to track wholesale and retail prices in Hawai'i. And if Hawai'i's retail prices continue to fail to keep pace with the nation, the commission will be looking to identify the root causes of the discrepancy, said Lisa Kikuta, chief researcher with the commission.

But it's too early to say just what is happening with Hawai'i's gasoline market, she said.

"The prices have just started to go down. We really don't know ... how long-term this is going to be. And it's hard to draw a conclusion, I think, from just this short period of time that's transpired since the decline," she said.