LIHUE — Gas prices are down.
Which is good news.
But the gas market is fickle, and while some Kauai drivers said they’re enjoying the reprieve on their wallets, they aren’t expecting it to last.
“It’s already climbing,” said Frankie Green of Kapaa, while filling up his pickup at the Costco gas station last week. “In the past two weeks, it’s risen 25 cents.”
On Thursday, the state’s average gas price for regular unleaded gasoline was $2.82 per gallon, significantly less than year’s average cost of $4.04, and 10 cents lower than it was last month.
Prices in Hawaii are little over 50 cents higher than the national average of $2.29 per gallon, according to AAA Hawaii.
By the end of the week, the cheapest place to buy gas was at Costco, which had a price of $2.77 per gallon. Folks in Lihue who weren’t fueling up at Costco were paying an average of $3.09 per gallon. Gas stations in Kapaa, Kilauea and Koloa were all charging around $3.15.
The most expensive place to buy gas on the island was on the North Shore, with some rates in Princeville reaching $3.39 per gallon.
“I remember when it was $4 a gallon and that was brutal; I’m enjoying these prices,” said service plumber Brian O’Hara. “I get reimbursed by the mile for my job, so lower gas prices equals more money in my wallet at the end of the day.”
Though he’s reveling in current prices and hopes they’ll stay low, O’Hara expects prices to once again rise.
“It always does this: the price moves up and down and you are happy when it’s low,” O’Hara said. “There’s nothing you can really do about it, there’s so many factors.”
The weightiest factor in the price is gasoline’s main ingredient: crude oil.
According to the U.S. Department of Energy, 40 percent of every dollar you pay at the pump goes to the crude oil industry. Refining takes 25 percent, distribution and marketing uses about 19 percent of the profits, and the remaining 17 percent goes to taxes.
In June 2014, prices were at $112/barrel. Today crude oil is $46/barrel and the forecast is that by next year, the cost will be around $53/barrel.
The University of Hawaii Economic Research Organization’s model for crude oil prices in 2015 indicates an average of $55/barrel, $9 above the current price, which would mean nationally, average gasoline prices would be below $3 a gallon for the rest of the year.
That would save “Hawaii more than $600 million,” explained Carl Bonham, University of Hawaii Economic Research Organization’s executive director and professor of economics. “Of course oil prices could bounce back sharply from lows in the $40s, but even an average of $70/barrel will lead to savings of over $400 million.”
According to Bonham, Hawaii is the most oil-dependent state in the union, and imports an average of around 2.6 million barrels of crude oil every month. That oil is used not only for gasoline, but also for jet fuel and electricity.
“If the oil we import is 50 percent cheaper in 2015 than it was in 2014, we can expect savings of close to $1.4 billion, or nearly 2 percent of the (gross domestic product),” Bonham explained.
Demand for oil products, according to Lance Tanaka, director of public affairs for Hawaii Independent Energy, is dependent upon price, but weather, the season, fleet efficiency and the general economy also factor into demand.
“Based on U.S. Department of Energy information, year over year, U.S. gasoline demand is up almost 3 percent,” Tanaka said.
The United States consumes about 20 million barrels of oil products per day, according to the U.S. Department of Energy, and almost half of that is used for vehicle fuel.
Each barrel contains 43 gallons of oil and yields approximately 20 gallons of gasoline. So, collectively, Americans consume around 178 million gallons of gasoline every single day, according to the DOE. The Motor and Equipment Manufacturer’s Association estimates collectively, Americans drive nearly 3 trillion miles every year.
In 2014, the nation consumed almost 7 billion barrels of oil. In order to fund that petroleum habit for one year, the U.S. paid around $322 billion.
Crude oil might have the lion’s share of the influence on gas prices, but island residents say they think politics play a big part in the numbers they see at the pump.
“I blame everything on Obama,” Green said. “He’s worried about climate change and our gas prices are going through the roof. There needs to be a change of priorities.”
While he’s bracing for prices to climb, Green said he isn’t going to be changing his routine to find the lowest rate when those numbers go back up.
“I don’t go out hunting for the lowest price,” Green said. “I have the places that I go and I stop by whatever gas station is on my way to where I’m going.”
Betsy Ludington of Koloa said she doesn’t go out of her way to find the lowest gas prices, either, but has a handful of places that she usually visits.
“I always go to Costco because they’re stable and they have the cheapest gas,” Ludington said.
Gas prices influence every part of the island’s economy, from tourism to food costs, Ludington pointed out, and when gas prices are down, there’s potential for cost savings in lots of areas.
“Everything is still really expensive,” Ludington said. “It’s nice to save a little bit when you’re buying gas.”