Gas prices plummeted to $2.89 per gallon yesterday at the Costco gas station in Iwilei, while prices elsewhere in the state hovered about 90 cents higher on average.

Costco Wholesale Corp. broke with the norm in Hawai'i by slashing gas prices as oil costs fall worldwide, while the rest of the state still averaged the second-most expensive gas in the country at $3.79 per gallon, according to AAA's Fuel Gauge Report.

Costco is able to cut fuel prices faster because its stores buy gas at current prices, while other stations may buy and sell gas at prices that are a week old, said Richard Galanti, Costco's chief financial officer.

"When the underlying cost of oil is going down in price, we turn our inventory dramatically faster than the average station in America," Galanti said.

Oil prices fell below $70 a barrel in Asia trading today.

"I don't know how Costco does their pricing," said Al Chee, a spokesman for Chevron Corp., one of two oil refiners in the state. "It's a very different business model than your traditional service station."

Costco is able to buy in bulk and serve more customers than most service stations, and the wholesaler doesn't have to support the cost of running a retail service station store, Chee said.

On the Big Island, the Costco store in Kailua, Kona, charged $2.99 per gallon yesterday.

"It's a slightly different business model," said Nathan Hokama, a spokesman for the state's other refiner, Tesoro. "But that's more than a couple of cents."