Welcome to life under a gasoline price cap.

After years of talk, Hawai'i today became the only state in the nation to experiment with a legal limit on how much oil companies can charge for wholesale gasoline.

Unfortunately for consumers, the cap isn't likely to lower prices, at least not in the beginning.

The law limits the price for wholesale gasoline, but retailers are free to charge whatever they want. The wholesale cap was set at $2.76 a gallon for regular on O'ahu, including taxes. After retailers add a markup, prices at the pump will likely average around $2.88 today, which is about where they were yesterday.

The big test for the price caps will come on Monday when about 28 cents is added to the limit, which could raise prices at the pump to about $3.16 for regular on O'ahu. The 28-cent jump results from the cap being based on Mainland prices, which have risen dramatically in the aftermath of Hurricane Katrina.

"Next week it's going to be a hell of a lot higher," said Bob Swartz, who operates Chevron stations in Kalihi, Kane'ohe and Kailua.

Gov. Linda Lingle warned yesterday that a jump in gasoline prices next week could "have a very negative impact on the economy and on the families all across the state."

Lingle, who opposed the gas price cap, wrote to Hawai'i's two oil refineries — Chevron Corp. and Tesoro Petroleum Corp. — urging them to refrain from charging the maximum allowed under the cap.

"I'm concerned that if they charge us to the maximum allowed under the law, which they can do under the law, it is going to have a very negative impact," Lingle said.

The refineries declined to comment on what their prices will be next week.

Democrats passed the gas cap law last year to give relief to Hawai'i residents who have traditionally paid the highest prices in the nation for gasoline.

That cap is set once a week based on wholesale prices in Los Angeles, the Gulf Coast and New York. The wholesale cap is an average of those prices plus a margin to account for the costs of shipping, distributing and marketing gasoline in Hawai'i.

"I don't think Katrina would have affected us nearly as much as it's going to, if we weren't tied to the Gulf Coast," said Swartz, the operator of three Chevron stations.

Prior to the cap, Hawai'i prices were generally based on Asian and Alaskan crude oil and gasoline costs.

Despite what is likely to be a spike in prices in the first 10 days under the cap, Democrats maintain that the new law will lead to lower prices over time.

"I think the reality is that over a period of time there will be savings," said House Majority Leader Marcus Oshiro, D-39th (Wahiawa). "We still think that we are doing the right thing."

In general, the caps are expected to drive local prices up faster when Mainland prices rise, then force prices to fall faster than in the past, when prices changed more gradually.

The caps don't require wholesalers to price at the maximum allowed, but economists and oil industry analysts said it is likely they will to offset times when they are forced to lower prices.

In urging wholesalers not to charged the maximum, Lingle pointed out that the gasoline they will sell next week was bought at pre-Katrina prices.

"My point in writing is that the gas they're going to be selling was refined from oil that they purchased long before this hurricane occurred and therefore I'm asking them to exercise some restraint," she said.

Chevron spokesman Albert Chee said, "We understand the purpose of the governor's message," but he still could not comment on pricing policy.

"We want to remind people it's the market that sets prices," Chee said. "That's certainly one of the reasons you don't want to tie this market to another market that is of no relationship."

Critics of price caps argue that oil companies could leave Hawai'i if they can't earn a profit, which could result in shortages. Gasoline shortages also could occur if consumers rush to buy gasoline ahead of the weekly change in set prices.

There was a moderate increase in business at some gas stations yesterday.

Lex Brodie's Tire Co. gasoline stations had a slight rise in traffic, according to marketing director Bill Gray, but he said there was no threat of shortages.

Lex Brodie's intends to take advantage of heightened consumer interest in finding low-price gasoline by offering what they call "the cheapest regular gasoline on the island" tomorrow at its Queen Street and Waipahu locations.

The plan is to offer gasoline for one day only at a price lower than Costco and local military bases. Lex Brodie's will hire off-duty police officers to help with the expected rush of customers and accept cash only.

"Yes, I'm going to lose money," Gray said. "It's very conceivable we could run out (of gasoline). I hope that's not the case."

Overall, refiners and dealers yesterday were not anticipating gasoline shortages on O'ahu today. However, there were indications earlier this week that there could be shortages: A Kaua'i supplier warned that he may not deliver gasoline to three stations on the island after the caps take effect.

Those concerns were alleviated yesterday after the Public Utilities Commission temporarily increased the amount wholesalers can charge to cover the cost of delivering gasoline on Kaua'i.

"That solved it for the moment," said Roger Cable, general manager for Kaua'i-based gasoline supplier Senter. "We're able to deliver Thursday."

Sen. Fred Hemmings, R-25th (Kailua, Waimanalo, Hawai'i Kai), yesterday called for an immediate repeal of price caps by the Legislature. Next week, Senate Republicans plan to propose legislation to reduce Hawai'i's dependence on oil.

"Among the many proposals will be the targeted uses of tax credits to develop technologies to reduce our dependency on petroleum," Hemmings said.

Meanwhile, Hilo resident Paul Crawford just wants lower prices on the Big Island. The average price for regular was $2.977 a gallon in Hilo, according to yesterday's AAA Fuel Gauge Report.

"They're killing us over here," Crawford said. "They might as well hold a gun to our heads."

Reach Sean Hao at shao@honoluluadvertiser.com.