For a state trying rid itself of oil for good, Hawaii and its electricity customers have become the biggest beneficiaries of the slide in crude oil.
Retail power costs in the island state, the highest in the U.S., dropped 23 percent in June from a year earlier because of tumbling crude prices, the U.S. Energy Information Administration said this week. Hawaii relies on oil for more than two thirds of its power generation, the most by far of any state, and the price plunge from $100 a barrel in June 2014 to near $40 now has yielded the biggest savings to the state’s consumers.
“Hawaii’s petroleum-heavy bulk power system has benefited greatly from the large fall in world oil prices,” the EIA said in a monthly electricity report. June marked “the sixth month in row the state had the largest year-over-year drop.”
Hawaii still has the highest power costs in the country, though the gap is narrowing. The EIA estimated that retail revenues, a proxy for prices consumers pay, fell to 26.46 cents per kilowatt-hour in June from 34.46 cents the same time last year. By contrast, costs in Connecticut, now second highest in the U.S., rose 9 percent to 18.08 cents. The U.S. average is 10.64 cents.
Hawaii Governor David Ige said he no longer sees liquefied natural gas as a transitional fuel from oil to renewable sources to produce electricity, according to an Aug. 24 statement. The state wants power generation to be fueled 100 percent through renewables by 2045.
“Due to Hawaii’s power sector being so reliant on oil there appears to be considerable relief in the form of lower electricity rates resulting from falling crude prices,” Paul Patterson, a New York-based analyst for Glenrock Associates LLC, said by phone. “But who knows how long this pricing environment will last.”