Price cap may boost gallon of gas to $2.87 on Oahu
Star-Bulletin Breaking News - Price cap may boost gallon of gas to $2.87 on Oahu
The price includes the traditional 12-cent a gallon dealer markup
Star-Bulletin Staff
citydesk@starbulletin.com
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As gas pump prices continue to set record highs, the state today issued its first listing of maximum prices at which wholesale gasoline can be sold starting next week, when Hawaii’s one-of-a-kind gasoline price cap regulations begin.
Using figures released by the Public Utilities Commission, Star-Bulletin estimates show the cost for regular unleaded on Oahu would be about $2.75 a gallon, not including any markups that dealers could charge. Prices would be about $2.91 a gallon on Maui and $2.83 a gallon in Hilo.
Dealers have traditionally tacked on a 12-cent markup to the wholesale price. That would bring the cost of a gallon of regular unleaded gas on Oahu to $2.87.
Current retail prices reached record highs today, according to AAA’s Fuel Gauge Report. The auto club listed average retail prices for regular, unleaded gasoline at $2.76 in Honolulu, $3.02 in Wailuku and $2.85 in Hilo.
Wholesalers are not obligated to charge the maximum allowed, but many analysts expect they will while they adjust to the new regulations. The state’s two major wholesalers — Chevron USA Inc. and Tesoro Hawaii Corp. — have not said whether they would charge up to the maximum.
Exactly what will happen at the pump won’t be known until Sept. 1. “I don’t think anyone knows because we don’t know what the wholesalers will do,” said Melissa Pavlicek, a spokeswoman for the Western States Petroleum Association, an industry trade group.
Today’s publishing of the price caps comes after the PUC denied motions yesterday by the petroleum industry asking the state to reconsider plans to implement the price controls.
The price caps represent the maximum cost at which wholesale gasoline can be sold in Hawaii. They are to be adjusted on a weekly basis to reflect changing market conditions in Los Angeles, New York and the U.S. Gulf Coast.
The baseline price for the cap as calculated by the PUC was $1.87 per gallon today. That price is down 11 cents from a week ago, reflecting a drop in prices in the three benchmark markets over the past five business days.
Two weeks ago, the baseline price was calculated at $1.84 per gallon. The formula and rules for the gas cap were filed by the PUC on Aug. 1. Since then, the commission had run two preliminary calculations for the oil industry and allowed the companies to respond.
Chevron and Tesoro, along with Shell Oil Co. and the Hawaii Petroleum Marketers Association, last week filed motions asking the PUC to reconsider the Aug. 1 order.
Companies argued that price controls were unreasonable, did not consider unique factors related to the gasoline market in the islands and could cause disruption in service across the state, among other things.
The commission rejected all arguments saying some were “incomplete and too unclear” and others “did not meet the burden of showing that the commission’s decision is unreasonable, unlawful and erroneous.”
“We continue to see the law as flawed and not in the best interest of the state,” Chevron spokesman Albert Chee said yesterday.
Chee and an attorney for Shell said they had not yet seen the PUC’s order by yesterday afternoon and declined specific comment. An attorney for Tesoro did not return a call seeking comment.
Supporters of the price cap insist that even if the caps cause prices to go up immediately, the measure will ultimately bring down the cost of gasoline once prices everywhere else start to come down.
“The problem that has plagued Hawaii’s consumers is the fact that the oil companies have always been quick to increase prices when mainland and global prices have gone up, but have failed to lower them when prices are falling elsewhere,” said Senate Consumer Protection Chairman Ron Menor, one of the chief authors of the gas cap.
Menor (D, Mililani) said without the cap, he believes oil companies would charge even higher prices than they are now.
The price includes the traditional 12-cent a gallon dealer markup
Star-Bulletin Staff
citydesk@starbulletin.com
--------------------------------------------------------------------------------
As gas pump prices continue to set record highs, the state today issued its first listing of maximum prices at which wholesale gasoline can be sold starting next week, when Hawaii’s one-of-a-kind gasoline price cap regulations begin.
Using figures released by the Public Utilities Commission, Star-Bulletin estimates show the cost for regular unleaded on Oahu would be about $2.75 a gallon, not including any markups that dealers could charge. Prices would be about $2.91 a gallon on Maui and $2.83 a gallon in Hilo.
Dealers have traditionally tacked on a 12-cent markup to the wholesale price. That would bring the cost of a gallon of regular unleaded gas on Oahu to $2.87.
Current retail prices reached record highs today, according to AAA’s Fuel Gauge Report. The auto club listed average retail prices for regular, unleaded gasoline at $2.76 in Honolulu, $3.02 in Wailuku and $2.85 in Hilo.
Wholesalers are not obligated to charge the maximum allowed, but many analysts expect they will while they adjust to the new regulations. The state’s two major wholesalers — Chevron USA Inc. and Tesoro Hawaii Corp. — have not said whether they would charge up to the maximum.
Exactly what will happen at the pump won’t be known until Sept. 1. “I don’t think anyone knows because we don’t know what the wholesalers will do,” said Melissa Pavlicek, a spokeswoman for the Western States Petroleum Association, an industry trade group.
Today’s publishing of the price caps comes after the PUC denied motions yesterday by the petroleum industry asking the state to reconsider plans to implement the price controls.
The price caps represent the maximum cost at which wholesale gasoline can be sold in Hawaii. They are to be adjusted on a weekly basis to reflect changing market conditions in Los Angeles, New York and the U.S. Gulf Coast.
The baseline price for the cap as calculated by the PUC was $1.87 per gallon today. That price is down 11 cents from a week ago, reflecting a drop in prices in the three benchmark markets over the past five business days.
Two weeks ago, the baseline price was calculated at $1.84 per gallon. The formula and rules for the gas cap were filed by the PUC on Aug. 1. Since then, the commission had run two preliminary calculations for the oil industry and allowed the companies to respond.
Chevron and Tesoro, along with Shell Oil Co. and the Hawaii Petroleum Marketers Association, last week filed motions asking the PUC to reconsider the Aug. 1 order.
Companies argued that price controls were unreasonable, did not consider unique factors related to the gasoline market in the islands and could cause disruption in service across the state, among other things.
The commission rejected all arguments saying some were “incomplete and too unclear” and others “did not meet the burden of showing that the commission’s decision is unreasonable, unlawful and erroneous.”
“We continue to see the law as flawed and not in the best interest of the state,” Chevron spokesman Albert Chee said yesterday.
Chee and an attorney for Shell said they had not yet seen the PUC’s order by yesterday afternoon and declined specific comment. An attorney for Tesoro did not return a call seeking comment.
Supporters of the price cap insist that even if the caps cause prices to go up immediately, the measure will ultimately bring down the cost of gasoline once prices everywhere else start to come down.
“The problem that has plagued Hawaii’s consumers is the fact that the oil companies have always been quick to increase prices when mainland and global prices have gone up, but have failed to lower them when prices are falling elsewhere,” said Senate Consumer Protection Chairman Ron Menor, one of the chief authors of the gas cap.
Menor (D, Mililani) said without the cap, he believes oil companies would charge even higher prices than they are now.
posted by Marcel at 5:48 PM
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