Hawaii to Cap Wholesale Gasoline Prices

awaii became the first state since the 1970s to authorize caps on wholesale gasoline prices, the Associated Press reported Thursday.

The state's Public Utilities Commission said that beginning Sept. 1, wholesalers in Honolulu on the island of Oahu may not charge more than $2.1578 a gallon for regular unleaded gasoline, or about $2.74 a gallon with taxes included, AP reported.

The commission set the caps, which will fluctuate from week to week, at different levels for Hawaii’s other islands.

A 2004 law authorizing the caps was set to force Hawaii's two refiners, Chevron Corp. and Tesoro Corp., to set their wholesale prices closer to mainland rates, AP reported. Proponents of the law said the refiners were taking advantage of the isolated island market to charge high prices.

Some industry officials and analysts said Hawaii, whose average retail gasoline prices are the highest in the country, now runs the risk of becoming less attractive to suppliers, raising the possibility of future supply problems, AP reported.

But some analysts gave the state credit for developing a pricing model that takes market forces into account, AP said.