Kauaians saw gasoline prices jump at least seven cents in the last two weeks. Average prices around the state as of Sunday for self-service regular were $2.389 — a bargain compared to Kaua‘i’s $2.569. In some places, Kauaians are paying
Kauaians saw gasoline prices jump at least seven cents in the last two weeks.
Average prices around the state as of Sunday for self-service regular were $2.389 — a bargain compared to Kaua‘i’s $2.569. In some places, Kauaians are paying $2.589. Kaua‘i has the second highest gas average, behind Maui’s $2.669.
The national average for self-serve regular unleaded gasoline was $1.999 — a soaring 16 cents more than last month, and more than 42 cents higher than the same date a year ago.
Californians are now paying more than Honolulu residents. But even Santa Barbara’s average for self-serve regular of $2.52 a gallon is less than Kaua‘i and Maui.
What we’re seeing at the pump today is only a reflection of what Hawai‘i’s two petroleum refiners, Tesoro and Chevron, paid for their crude oil on the commodities market some six months to a year ago.
“When the price of crude goes up, you don’t see a jump in prices at the pump right away,” said Roger Cable, general manager of Kaua‘i-based Senter Petroleum.
Today, the price of a barrel of crude is near $55 per barrel, and the prices we’re seeing at the pump are a reflection of crude prices nearer to $40 per barrel, Cable said. Logic dictates that everyone should brace for higher prices at the pump, say experts.
Senter supplies two independent Chevron stations on Kaua‘i, but mostly commercial businesses, farms and hospitals.
They, like Kauai Petroleum which supplies three independent Union 76 stations, get gas from Chevron and Tesoro. The other gas stations on Kaua‘i are serviced directly by Chevron and Tesoro. All are simply passing on higher rates to their stations, who in turn are passing it on to the consumer.
No matter who sells to who, the prices at the pump will almost always basically be the same because everyone gets their product from the same two refineries. And no one at the moment seems to mind paying what they’re asking.
“I haven’t noticed any drop off in my business,” says Glen Konishi, owner of Gary’s Service Inc. in Lihu‘e. “After the summer, it dropped off. But there are still a lot of tourists on the island.”
While Mainland drivers enjoyed two major price dips last year, one in May 2003 and another in the fall, Hawai‘i’s prices remained flat. Oil-industry analysts blame Hawai‘i’s isolation, small market, lack of competition, and taxes as high as 58 cents per gallon, for the high pump prices that never seem to go down.
Those prices have offset any post-summer drop off in customers for Kaua‘i’s gas stations, and even local customers don’t seem to be cutting back much, Konishi observes.
That’s probably because, even as it becomes more and more painful to stop at the pump, gas prices still aren’t prohibitive enough to force a major change in behavior or consumption. Until prices are so high that consumers are unwilling to pay, and turn to more fuel-efficient transportation, demand here in the United States and around the world will continue to drive prices up.
“It really comes down to whatever the market is willing to bear,” said Lowell Kalapa, president of the Tax Foundation of Hawaii.
“Have you ever been behind a Cadillac Escalade and wondered how much it costs to fill the tank on that?” Kalapa asks. “Well, it’s all those gas guzzlers that are driving the price of gas. If we were all driving gas-sipping Hondas, the demand would be less, and the gas-station owners would be dropping prices to unload their product.”
We’ve got it good here in the good ‘ole U.S. of A., says Cable.
“The price of gas is nowhere near the price of crude oil, which has nearly doubled in the last year,” he said. Demand on the world oil market, and particularly from China, are driving prices, yet the price at the pump in the states is cheap compared to other countries.
Part of that has to do with where the United States — and Hawai‘i particularly — gets its oil.
Chevron and Tesoro import crude oil from Alaska and about a dozen countries, including China, Australia, Vietnam, Venezuela and Norway. The state would be in worse straits if it only received oil from a few sources, like the Middle East, said Albert Chee, spokesman for Chevron. For example, from January to August of 2002, Chevron and Tesoro brought a total of 9.8 million barrels into Hawai‘i from Indonesia, 42 percent of their foreign imported oil, according to federal data.
One of the benefits to higher oil prices, says Cable, is that oil companies, flush with cash, can now afford to explore for other sources.
“Prices are higher than they should be,” Cable admits, but “as the prices go up, it opens things up to exploration,” he said. “When oil goes above 40 bucks, it makes it economically feasible to pull it out of the ground.”
Which means more supply, and possibly lower prices.
But don’t count on it, says Kalapa, who argues that, as long as demand remains high, any more oil supply will simply be absorbed. That just means it will take more time for America to wean itself off its gas-guzzling lifestyle.
Phil Hayworth, business editor, may be reached at 245-3681 (ext. 251) or phayworth@pulitzer.net.
