Our office has been contacted recently by a number of constituents regarding the steady increases in the price of a gallon of gasoline. This is understandable, since Maui County gasoline prices can be at least 40 cents more per gallon than the price of gasoline on O'ahu.
People are clearly frustrated over the high price of gasoline and they are asking, "What affects the changes in the price of gasoline in our state?"
The fact is there are multiple factors that influence the price of gas on Maui.
Rep. George Fontaine
(R HD-11), Kihei, Wailea, Makena
Some of these factors are controlled in our state through public policy and legislation. Others are determined by market forces outside of Hawai'i.
Breakdown of gasoline pricing
The U.S. Energy Information Administration (USEIA) has published information regarding the factors that affect gasoline prices at www.eia.gov/energyexplained/index.cfm?page=gasoline_factors_affecting_prices. The USEIA states that in 2010, on average, the price of gasoline in the U.S. was broken down as such: 68 percent crude oil, 14 percent federal and state taxes; 7 percent refining costs and profits; and 10 percent distribution and marketing.
Source of oil affects price
The press often quotes the West Texas Intermediate (WTI) price. The WTI prices affect gasoline prices on the Mainland; however, Hawai'i prices are not influenced by the WTI oil prices, since the oil that is refined here comes from Southeast Asia. The index that affects the price of the crude oil that is refined in Hawai'i is the MINAS (Southeast Asia) index.
For example, on March 16, the West Texas intermediate price was $107.06 per barrel. On the same day, the MINAS spot price was $136.94 cost per barrel.
The higher prices in Southeast Asia can be a reflection of regional supply and demand and disaster events--such as last year's earthquake and tsunami in Japan.
Factors unique to Maui County
There are two gasoline refineries in Hawai'i, both on O'ahu. Shipping refined gasoline from O'ahu adds to the cost per gallon on Maui. Secondly, market forces affect the price of gasoline by a few cents per gallon. The greater number of retailers on O'ahu as compared to Maui creates increased competition, which can lower prices.
State grade requirements affect price
Different grades of crude oil can be used for refining into gasoline. These various grades of crude have a range of costs.
The refineries in Hawai'i require the purchase of a higher-priced oil called "light sweet crude" to be used in the processing and refining of gasoline.
High local taxes affect price
Hawai'i has the fourth highest tax rate on gasoline compared to other states, with excise taxes at $0.17 per gallon and other taxes and fees at $0.301 per gallon--for a total of $0.471 per gallon (Tax Foundation 2012 Facts & Figures, Table 21, at www.taxfoundation.org/publications/show/2181.html). Additional federal and county taxes bring the total taxes on a gallon of gas to $0.71 for Maui residents.
Maui County can raise or lower gasoline taxes independently of other counties in Hawai'i. According to Honolulu Civil Beat, the County of Honolulu has the highest gasoline tax at 17.5 cents per gallon. This is followed by Maui, at 16 cents per gallon; Kaua'i, at 13 cents per gallon; and 8.8 cents per gallon on Hawai'i Island.
Comparing gas prices
Because there are many factors that influence the cost of gasoline in Hawai'i, it is important to remember that gas prices rise and fall over time. If you would like to track the rise and fall of gasoline prices over time, go to www.hawaiigasprices.com/retail_price_chart.aspx.
If you need to contact me with any issues or concerns regarding South Maui, please call my office at (808) 586-8525 or email email@example.com.