Energy Expert to Hawaii: Expect $6-a-Gallon Gas
Amid rising oil prices, one energy expert says Hawaii residents ought to get used to paying even more at the pump.
As long as the U.S. — Hawaii included — maintains its addiction to oil for transportation, Fereidun Fesharaki says he expects prices will top $6-a-gallon (or $200 per barrel for oil) in less than five years and have a “dramatic” impact on the country.
Fesharaki, CEO of energy consultancy , spoke with reporters Monday before giving a public seminar at the at the University of Hawaii, where he’s a senior fellow. He says U.S. demand needs to fall before prices will fall.
“On the demand side, there’s only one fat boy in the room: that’s the U.S.,” Fesharaki said. “Twenty-seven countries of the European community combined use less than the U.S. At the moment, China, India, Japan, Korea combined are 25 percent, 20 percent less than the U.S.,” he said, noting that the U.S. makes up 40 percent of global consumption.
He had a message for Central Oahu, too: “In the U.S., we pay regular prices and we complain: ‘Oh, prices are too high. I come from Mililani and pay $400 a month.’ Well, you’re still paying too little. You should be planning on paying $1,000 or $800. The idea that, you know, I pay more for my house and all of my expenditures in Hawaii, but I don’t want to pay more for this because some how this is too high — that’s a belief that oil is cheap.”
He says once we break the addiction, possibly through taxes, prices will stabilize. But they probably won’t go any lower than they are now.
“I don’t think $200-a-barrel oil will last — it’s not one day — but I think in a year or two, the back of the U.S. demand will be broken,” Fesharaki said. “And U.S. demand will fall and the price will fall with it. How far will it fall, we don’t know, but I don’t think it’s going to go lower than it is today.”
And as for those who say Hawaii’s oil-independent future depends on electric cars? They’re in for a disappointment, he says. Oil feeds the power plants needed to charge the cars. He called Hawaii’s electric car push “more passion than logic.”
Crude oil prices rose above $108 a barrel Monday, and the national average for regular gas was $3.66 a gallon, according to AAA’s . Hawaii has the highest price for regular gas with a statewide average of $4.31, according to AAA.
Fesharaki said the country wouldn’t be so sensitive to rising oil prices triggering higher gas prices if it taxed petroleum products.
“Then we would cut the demand ourselves,” he said.
He said when oil hit a high of $147 per barrel in 2008, European countries were better insulated because they heavily tax gasoline, with taxes making up as much as 75 percent of the cost of a gallon of gas. Prices are currently between $6 and $7 a gallon in the Netherlands, Germany, France and the UK, according to the .
He said the three tax options are: excise tax, carbon tax and cap-and-trade tax.
Looking to the future, Fesharaki said in his 30 years as an energy analyst, he has yet to see what the so-called magic bullet will be to end the country’s reliance on oil for fuel.
