As crude oil and gasoline prices drop on the mainland, bringing relief to consumers after a long period of high prices, Hawaii residents and businesses face a grim alternate reality: gasoline prices haven’t dropped much, and neither has the price of electricity.

Prices for regular gasoline dropped to as low as $3.39 per gallon at the end of November, the U.S. Energy Information Administration reported, while the American Automobile Association reported that Hawaii was the only state with regular gasoline averaging more than $5 per gallon. AAA’s national average price on Friday was $3.45 a gallon.

Meanwhile, electricity prices in Hawaii remain high, despite lower crude oil prices. Hawaii generates much of its electricity from oil-powered facilities.

So what’s going on?

Dec. 2, 2022 Gas Prices
The gas price at this Texaco station was still well above $5 a gallon on Friday. Stewart Yerton/Civil Beat/2022

“As oil prices go up, electricity prices go up,” said Sumner La Croix, a research fellow and professor emeritus of economics with the University of Hawaii Economic Research Organization. He noted this is all set by a formula approved by Hawaii’s utility regulator, the Public Utilities Commission.

With oil prices dropping, from a peak of about $120 per barrel to around $80 per barrel, electricity prices also should come down soon, La Croix said.

“But,” he added, “there’s a little bit of a lag.”

  • 'Struggling To Get By' Special Series

While UH’s La Croix said the high electricity costs make sense if there’s a lag between the time oil prices decline and when that shows up on electric bills, Hawaii’s high gasoline costs are different, he said.

In the past, he said, Hawaii gasoline has generally cost about $1 more than mainland gasoline. These days, he noted, the difference is $1.70.

“If you’re looking for anomalies,” he said, “the gas prices are very anomalous.”

The result: Hawaii’s high cost of living remains even higher than usual this winter, while prices on the mainland drop.

Hawaii residential customers paid about 46 cents per kilowatt hour in September, according to the EIA. That was nearly three times the national average of 16 cents, and more than twice the West Coast average of 22 cents.

Hawaii Vs. U.S. Electricity Prices

As Hawaiian Electric spokeswoman Shannon Tangonan described it, customers of its Oahu, Big Island and Maui utilities faced a triple whammy that drove up prices in 2022.

First, prices during the height of the pandemic declined as demand for oil dipped to historic lows. Then, as the economy started reopening, prices rose steadily in 2021 amidst increasing demand, and spiked after Russia invaded Ukraine.

Finally, the September closing of Oahu’s coal-burning power plant in Kapolei, a big source of less expensive electricity, meant Hawaiian Electric needed to use more petroleum to generate electricity for the state’s most populous island.

“The idea that oil prices won’t get passed on is kind of a crazy one,” La Croix said.

Still, the impact has been striking. While Hawaii has always had unusually high electric prices, they soared in the past two years. Between January 2021 and June of this year, for example, residential electricity prices on Oahu rose 51%, according to the Hawaii State Energy Office.

Percentage Change In Residential Electricity Price

The impact is enormous not just for residential customers struggling to get by, but also for businesses, including small, local ones without deep-pocketed parent companies to fall back on.

Hunter Long, co-owner of Keep It Simple, an eco-friendly “zero waste” store that sells items like shampoo, body oils and laundry soap in bulk, as well as items like swim suits made from recycled material, said the cost of electricity at Keep It Simple’s Kaimuki location has nearly doubled recently, to about $465 per month from $250.

The bill is even more stunning at Keep It Simple’s new location at Kapolei’s Ka Makana Alii mall.

“I remember being shocked, absolutely shocked when I saw the electric bill at our new store,” she said.

Long said she and co-founder Jillian Corn strive to operate a socially responsible business that pays its workers a living wage, even if it means a lower profit margin. In that context, an unexpected power bill increase poses a major challenge.

“As a small business, I now understand how many small businesses don’t survive here,” she said.

Consumer Advocate Was Not Available

For ratepayers like Long, as well as residential customers, there isn’t a lot they can do except to use less electricity. Unlike many communities on the mainland, there isn't any nonprofit community consumer advocacy organization they can turn to for help protesting or even understanding their rising bills.

Hawaii ratepayers technically are represented by the Department of Commerce and Consumer Affairs’ Division of Consumer Advocacy. The division’s main work involves representing the public’s interest when, for instance, Hawaiian Electric seeks approval from regulators to raise rates.

However, the division’s enabling statute says the consumer advocate also may recommend legal changes to better serve the public and “shall counsel utility customers in the handling of consumer complaints before the public utilities commission.”

A spokesman said Consumer Advocate Dean Nishina was not available to discuss the division’s work dealing with Hawaii’s high electricity costs.

Hawaiian Electric’s Tangonan said the volume of calls from customers about high bills increased during the summer but has lessened since then.

The company’s website includes tips for reducing energy costs, she said, such as using fans instead of air-conditioning during the utility’s peak-use hours from 5 p.m. to 9 p.m. And the company offers long-term payment plans for people who can’t pay their bills all at once.

"Struggling To Get By" is part of our series on “Hawaii’s Changing Economy” which is supported by a grant from the Hawaii Community Foundation as part of its CHANGE Framework project.

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