Falling gas prices that are sweeping much of the nation have failed to arrive in Hawaii, where motorists are paying more at the pump than they have at any time since May.
The average gas price in Hawaii rose to $4.23 a gallon Tuesday, a full 75 cents more than the national average of $3.48 a gallon, according to the AAA Daily Fuel Gauge Report. That gap is significantly wider than just three months ago, when Hawaii’s average price was 38 cents above the national average. Prices in Hawaii ranged from an average of $4.14 a gallon in Honolulu to $5.49 in Hana on Maui.
Hawaii’s prices are also markedly higher than the two next closest states, Alaska and California, where motorists are paying an average of $3.97 and $3.88 a gallon, respectively.
The national average gas price has been dropping steadily since June, thanks in part to falling crude prices. Crude oil futures closed at $80.45 a barrel Tuesday after reaching a three-year high of $113.93 on April 29.
Chevron, which operates one of two oil refineries in Hawaii, said Hawaii gas prices haven’t fallen along with mainland prices in part because the crude oil it imports from East Asia for use in Hawaii has been trading at a premium to other global crude markets. Prices were pushed up because of increased demand from Japan after the earthquake and tsunami in March, which shut down a major nuclear plant in the country, said Al Chee, Chevron’s spokesman in Hawaii.
Chevron is paying as much as $110 a barrel for some of its "Far Eastern" crude from Indonesia, Vietnam and Russia, Chee said.
"Crude costs clearly can have an impact," Chee said. "The falling crude prices that are being widely reported aren’t true for crudes that Hawaii uses," he said.
He also said varieties of crude oil used at both the Chevron refinery and one operated by Tesoro Corp. are limited because the facilities are not as sophisticated as other refineries the companies operate on the mainland. "We’re always shopping for the best price, but the types of crudes we can run in the refineries here are limited."
There are several other factors that have traditionally kept Hawaii gas prices above the national average, including the state’s small market size, geographic isolation and lack of mainland-style competition.
Petroleum industry analyst Tim Hamilton said he does not believe the disparity in crude prices between global markets has much to do with Hawaii’s higher gasoline prices.
"You can have oil delivered to Hawaii at a similar cost to having it delivered to Houston," said Hamilton, who is based in Washington state. "The gas price differential also isn’t the result of the higher cost of doing business in Hawaii."
"That’s a charade the oil companies have been pushing for years. It’s pure profit. If you had economic forces like you have on the mainland, it would be different," Hamilton said.
While Chevron and Tesoro are the only companies that refine oil in Hawaii, a third company — Aloha Petroleum — has the capability to bring in gasoline by tanker at its terminal on Oahu. Chee said that capability serves as a check, ensuring the two refining companies price their gasoline competitively.
However, Hamilton said he doubted Aloha Petroleum would ever bring in gasoline by tanker because it would increase the supply of gasoline in the state and drive down the price.
"It works out to the advantage of all three not to have extra fuel come into Hawaii that would lower the price for everyone. There is no incentive for them to bring extra product in."
Hamilton helped the state create a gasoline price cap that was put into place from September 2005 through May 2006 in an attempt to curb Hawaii’s high gas prices.
The gas cap was intended to link Hawaii’s pump prices to the fluctuations found in more competitive mainland markets. The law took effect during a period when gasoline prices across the nation were rising. Consumers who expected the cap to cut gasoline prices were disappointed, and the cap was repealed.
A report ordered by the Public Utilities Commission after the gas cap was abolished found that Hawaii wholesale gas prices in the first half of 2009 were 3 to 11 cents higher than they would have been if the gas cap was still in place.