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Surf's Up: California Gas Prices Top Hawaii's

Consumer group praises Hawaii effort to expose profits

March 17, 2008

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In a reversal of the usual gasoline price pattern, the isolated market of Hawaii now has cheaper gasoline than California, said the Foundation for Taxpayer and Consumer Rights.

In addition, Hawaii’s Legislature is proposing to require that oil refiners open their books on their costs and profits, a move that FTCR has long advocated in California and nationally.

While Hawaii dropped a little to $3.62 a gallon today for regular, California hit another daily record at $3.634, per AAA. In addition, because of its “hot fuel” law, Hawaii compensates for its high gasoline temperatures by selling a slightly larger gallon at the pump. The total difference is more than a nickel a gallon, said FTCR.

“When Hawaii’s gasoline price drops below California’s, it’s a signal that prices are separating from reality in the U.S. West,” said Judy Dugan, research director of FTCR and its OilWatchdog project. “Crude oil prices have started dropping and the national average gasoline price eased a fraction of a cent on AAA today, but there’s no signal yet that Western gasoline prices will follow.”

Even in Washington State, which uses plain regular gasoline instead of a clean-air formula, and also has lower gasoline taxes, the price per gallon is a record $3.528, noted FTCR.

Hawaii legislators are at least taking action to control the usual spring runup in gasoline prices and refinery profits, said FTCR. The Hawaii legislation (SB 2630) has passed the state Senate and is being considered in the House, reports the Honolulu TV station KHON.

The bill would require nearly every segment of the state’s refining industry to disclose the cost of doing business in Hawaii. Oil and gas companies would be required to file a report every six months on such items as the cost of crude oil, refinery operating expenses, marketing operating expenses, and corporate overhead.

“The oil industry is lobbying furiously against Hawaii’s proposal, but it’s nothing more than a little sunshine on the dark hole of gasoline pricing,” said Dugan. “California lawmakers caved in to oil industry pressure last year and failed last year to pass a much milder version of a disclosure bill. They owe it to California’s stressed-out motorists to do it this year.”

Hawaii’s retail gallon of gasoline is larger than in the rest of the U.S. because of the state’s “hot fuel” law. Hawaii is warm year-round, and so is gasoline sold in the state, averaging over 80 degrees. Gasoline expands and loses energy as it heats up. Hawaii requires a gallon slightly more than 1% larger than the U.S. standard, a hypothetical “60-degree” gallon.

“In reality, Hawaii’s gasoline is more than a nickel cheaper than California’s, because drivers are already getting four cents extra worth of gasoline in each gallon,” said Dugan. “No wonder oil companies and marketers are so opposed to giving motorists in California and other warm states a fair measure of fuel by compensating for fuel temperature on retail sales.”

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