Oil Price Falls Off Cliff; What about Pump Prices?

Gasoline prices move in the same direction as the per-barrel cost of oil – that we know. Gas costs about $1 per gallon more today than it did a year ago in Hawaii because until earlier this week, oil was priced at about $30 more per barrel than May 2010.

One look at today’s oil charts suggests we can soon look forward to reduced prices at the pump. Both Brent crude and West Texas Intermediate prices are falling like a rock at the end of the week.

Why? It’s anybody’s guess, and you can find plenty of them, including this one, all over the ‘net.

Hawaii drivers want to know if we’ll see pump prices take a similar dive. Drivers grumble when prices don’t fall as fast as they rise. Station owners insist changes in their pump prices lag what’s happening in the oil market because they’ve already locked in the cost of the gas sitting in their holding tanks. Today’s average price for regular gas statewide and in Honolulu set new records again today -- $4.594 and $4.481 respectively – thanks to the lag even though prices have fallen all week.

The last time oil’s price was at today’s level was in mid-February. The chart below shows the rise in the average price of gas in Honolulu over the past three months as oil’s price ramped up.

If this week’s trend continues, drivers will expect – no, demand – to see a downward slope in gas prices over the next three months.

But that’s a big “if.”