Lower oil prices are beginning to filter through Hawai'i's economy, with Matson Navigation Co. cutting its fuel surcharge and Hawaiian Electric Co. reporting slightly lower residential bills this month compared with last month.

The declines, while relatively small, were welcomed after years of seemingly relentless fuel-related hikes in shipping and electric costs.

"As long as it's not going up ... I'll be happy," said Melissa Derry, a 30-year-old registered nurse from Downtown Honolulu. "If it is going lower, let's just hope that it keeps going lower."

Matson, the state's largest cargo shipper, announced yesterday it will lower its fuel surcharge from 21.25 percent to 19.75 percent Oct. 1.

Robert Scott, general manager of the Bestsellers Books & Music store in Bishop Square, said the reduced surcharge will help his store, which has been absorbing the higher costs of shipping rather than passing them on to customers. But overall, he doesn't think it'll make much of a difference to consumers yet.

"It just won't be noticed," he said. "Much of the costs of bringing goods over from the Mainland are being passed down to the consumers, but once a retailer has (increased) the price, you rarely see them bring that price back down."

The reduced surcharge is still more than double what it was two years ago and follows a dozen consecutive surcharge hikes over about the last four years. But the decrease — the first since November 2001 — is a hopeful departure from the frustrating upward trend in costs.

For Matson customers, the lower fuel surcharge means a decrease in shipping costs ranging from $30 to $100 per container, said Dave Hoppes, Matson senior vice president for ocean services. That could translate into a 1.1 cent drop for a 20-pound bag of rice, Matson said.

"Matson is pleased to finally make a downward adjustment to our fuel surcharge, after a year of dramatic hikes in fuel prices," Hoppes said. "While fuel costs remain at historic highs, we have seen some relief in the past month, allowing us to make this reduction. ... We will continue to monitor fuel costs and adjust the fuel surcharge accordingly. Hopefully this current trend will continue."

GAS PRICES FALLING

Horizon Lines, the state's No. 2 shipper, said company officials are discussing Matson's action and will make a statement soon. Horizon typically matches Matson's fuel surcharges and rates.

The drop in shipping rates comes on top of the relief consumers are already feeling from declining gasoline prices. Regular was selling for an average of $3.084 a gallon in Honolulu yesterday, compared with $3.255 a month ago, according to the AAA Daily Fuel Gauge Report.

The recent decline in fuel prices will be reflected in electric bills as well, albeit by a minimal amount.

A typical O'ahu household using 600 kilowatt hours this month is paying $125.94, $1 less than last month because of lower fuel costs, said Lynne Unemori, Hawaiian Electric vice president for corporate relations.

"Given the trend in our fuel-purchase costs, we hope to see a decrease in October as well," she said. Increases in electric bills over the last couple of years have been mostly because of a rise in the "energy cost adjustment," which is tacked on to bills to cover fuel costs and is adjusted monthly.

"The energy cost adjustment mechanism serves to pass through the actual cost of fuel every month. Right now it's certainly going in the right direction," Unemori said. She noted there's a lag between when HECO pays for the fuel and when those costs show up in customers' bills because HECO carries at least a month's worth of fuel inventory.

CHEAPER ELECTRICITY

Lower fuel costs have prompted two decreases in the last year — a $1.33 drop in December and a $2.42 decrease in March — for typical residential bills, she said.

Residents are still paying more than they were a year ago. The typical residential electric bill was $117.74 in September last year. It was $94.11 in August 2004.

Still, any decrease is good news for Kaimuki resident Janice Parker.

"Anytime I see it lowered, that sounds great ... whether it's Matson or HECO, anything," said Parker, a 63-year-old librarian at the Hawai'i State Library. "We went by the gas pump today over where we live in Kaimuki and it was $3.05. And we were delighted. Both my husband and I said, 'Oh, we can't wait to get to the gas station and fill up now.' Obviously we're hoping that ... this will continue and that we will see a downward trend in all of these things.

"It's not just for us, it's for all the people of Hawai'i."

Reach Lynda Arakawa at larakawa@honoluluadvertiser.com.