Hold on to your wallets, Honolulu residents: gas prices have reached the dreaded $4-a-gallon average.

In Honolulu yesterday, the average cost of regular fuel was $4.015 a gallon, compared to $3.722 a month earlier, according to the AAA Hawai'i Daily Fuel Gauge Report.

Yesterday's average price was up almost 70 cents from a year ago, AAA Hawai'i said. Experts had predicted the price would hit $4 a gallon on O'ahu by summer.

It was the first time Honolulu hit the $4 average, although drivers on other islands already had been paying that much. In Hilo yesterday, a gallon of regular cost an average of $4.119; in Wailuku, $4.452, AAA Hawai'i said.

"It used to be real estate was the way to get rich in Honolulu; now, it's owning a gas station," said Kate Matsuo, who drove her bright yellow Volkswagen Beetle down to Waikiki last night from Makiki to watch the sunset.

"I'm just thankful that I don't live in Japan anymore," Matsuo said. "It's bad here, but it's crazy in Japan. I guess we're still cheaper than the rest of the world and we should be thankful for that."

Student Marcus Hokama, though, said he doesn't drive his Toyota 4Runner truck as much as he did before prices started climbing in the spring.

Hokama said he filled his tank up earlier in the week, just before prices hit the $4 mark. "If I look at the pump, I start to cry," he said.

Gas station owners had to adjust to the higher prices, too.

Bill Green, a former owner of, and now consultant to, Kahala Shell, said the station had to increase from $75 to $100 the limit accepted by the pumps for credit card purchases.

"We're addicted to our freedom of transportation and the ability to decide to go where we want to go and when we want to get there," said Green. "There definitely has to be some changes. I don't have the answers to what's gonna happen."

"Everyone is talking about gas prices," Green said. "People are using the car that uses the least amount of gas and combining trips, but in Hawai'i there almost is no discretionary driving."

On average, drivers in Hawai'i drive about 7,000 to 9,000 miles a year.

The higher fuel prices are affecting not only the individual pocket book, but the state's as well. More expensive gasoline is among the factors that state economists say is expected to drag down the overall economy in the first part of the next fiscal year.

Last week, as it assessed the state's economic picture, the Council on Revenues lowered its revenue forecast for this fiscal year to 3.3 percent annual growth, down from 3.9 percent in March.

And it cut its growth estimate for next fiscal year by more than half, 2.0 percent revenue growth, down from 4.1 percent in March.