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The Honolulu Advertiser
Posted on: Saturday, May 24, 2008

Hawaii gas prices now averaging $4

By Eloise Aguiar
Advertiser Staff Writer

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The average price for a gallon of regular gasoline in Hawai'i jumped 9 cents this week, hitting $4 a gallon yesterday.

"We have record-breaking prices again," said Richard Velazquez, regional manager for AAA Hawaii. "Sometimes I wonder if we'll see any relief anytime soon."

AAA Hawaii said the average price in Hawai'i yesterday was $4.01 a gallon. In Honolulu the average was $3.90, in Hilo $4.05, and in Wailuku $4.32.

As unlikely as $4-a-gallon gas once seemed, there's no end in sight to rising prices.

"Obviously the increase in gas prices continues to escalate the cost of living in Hawai'i, the cost of doing business in Hawai'i and the cost of coming to Hawai'i," said Scott Schroeder, dean of the business school at Chaminade University.

Schroeder said Hawai'i's dependence on ships and planes to bring goods and visitors means that the escalating cost of fuel endangers the state economy.

This week's jump in Hawai'i accompanies increases across the country and record prices globally. The national average for regular gasoline yesterday was $3.87 a gallon. Last month the average was $3.53, and a year ago, $3.22.

Worldwide increases in the price of crude oil are being blamed for higher prices at the pump. Analysts blame soaring demand and a more constant supply, but a University of Hawai'i-Manoa professor said the supply side of the equation is being manipulated by speculators buying oil and selling it at higher prices.

Carl Bonham, executive director of the University of Hawai'i Economic Research Organization, said the growing use of oil by developing countries such as China and India is pushing up global demand and prices. But of almost equal weight, he said, are the hedge funds, retirement funds and endowments that are buying oil in anticipation of higher prices.

Bonham likened the phenomenon to a bubble market in housing prices and predicted the "oil bubble" would also end.

"I don't particularly believe that oil prices are going to just keep going up forever, and part of the reason is if oil prices go up enough and if gasoline goes up enough, we're going to stop using it," Bonham said. "We're seeing evidence of that already with increased bus ridership and people switching (vehicles)."

The drop in demand will turn the tide, he said, but it's not clear how high prices will reach first.

More Hawai'i residents have turned recently to TheBus, bicycles and carpooling to save money.

But not all motorists are willing to give up their cars. Ray Sweeney, owner of Sweeney Communications, said he bought his used Mercedes a year and a half ago and didn't realize it required premium gasoline that's selling now for about $4.10 a gallon.

Selling the car isn't an option because he'll be competing against other people with the same idea, said Sweeney, who lives on Kane'ohe Bay Drive and works in Honolulu. He's hoping there's truth to a rumor that a computer chip could allow his car to use a lower grade of gas.

"My sense is probably I'll keep (the car) and keep my fingers crossed that the Arabs will cave in somewhere along the line," he said.

Reach Eloise Aguiar at eaguiar@honoluluadvertiser.com.