When Keani Rawlins-Fernandez got her first job working at the cash register of Moloka‘i Pizza Cafe as a teenager in 1998, gas prices hovered around $1.27 a gallon.

She remembers the price, because even on her minimum wage salary of $5.25 an hour, she was able to afford to fill up her tank.

So Rawlins-Fernandez, now a Maui County Council member, got a shock when she drove through Kaunakakai town this month and saw gas prices had soared to more than $7 a gallon for unleaded gas. For diesel, it was more than $8 per gallon.

Even in a lifetime of living on an island where drivers regularly pay top dollar at the pump, “this is the highest it’s ever been,” she told the Hawai‘i Journalism Initiative. 

On Feb. 28, the U.S. and Israel launched the first strikes in a deadly six-week war with Iran, triggering the closure of the Strait of Hormuz where more than 20% of the world’s total oil supply passes through. Since then, the price of oil has soared from about $70 a barrel to nearly $120 before coming back down to just under $100 as of Friday after a tentative two-week ceasefire was struck earlier this week. 

Across the country, gas prices have climbed to record levels, surpassing a national average of $4 a gallon last week for the first time since August 2022, according to AAA. In Hawai‘i, it’s even higher — an average of $5.63 a gallon for regular gas, an all-time record for the state and the second-highest in the country after California at $5.92 a gallon. 

Hawai‘i’s high gas prices are not just because of its isolated location in the middle of the Pacific, but also because Hawai‘i companies tend to get their oil from Asia, which is heavily reliant on the Strait of Hormuz, said Albert Chee, executive vice president in charge of retail, marketing and community relations for Island Energy Services that runs the longtime Uptown gas station in Wailuku.

Another reason is products shipped to Hawai‘i are subject to the Jones Act, which requires that goods shipped between U.S. ports must be on U.S.-flagged ships, Chee said. Critics say this has increased the price of goods in Hawai‘i, and last month Trump waived the act for 60 days for the transport of certain energy products.

On the continent, other companies can buy fuel directly from U.S. producers and have it delivered by pipeline, railcar or ship. But Hawai‘i doesn’t have other options.

“Generally speaking, 99% of the time, the most competitive price to secure fuel for Hawai‘i comes out of Asia,” Chee said. “And Asia’s price for petroleum products has risen much sharper than the Mainland.”

Neighbor Islands typically pay a higher price due to additional transportation costs. In Kahului, gas prices averaged $5.67 a gallon this week, the second-highest in the state after Līhu‘e, according to AAA.

On Moloka‘i, rates reached as high as $7.09 a gallon for unleaded gas earlier this week before dipping slightly to $6.99 a gallon at the newly christened Aloha Gas station (formerly Rawlins Service) and $6.97 a gallon at Fish and Dive, according to social media posts from residents who also said it was the first time they’d seen prices so high.

Diesel rates were more than $8 a gallon at both gas stations, and Fish and Dive had to put white tape over the number 3 to make the shape of an 8, photos showed.

“So unprecedented, we don’t even have signage for it,” Rawlins-Fernandez said.

On Moloka‘i, fuel powers everything from the lone airline servicing the island to the fishing boats taking people to Maui to the ever-popular Toyota Tacomas rumbling down the road, said Rawlins-Fernandez. Unlike other islands, Moloka‘i doesn’t have frequent public transportation. 

It’s no longer a market where a 15-year-old Pizza Cafe worker can afford a tank of gas.

“Most people work like an average-paying job, and so I don’t think folks are expecting an increase in salary to be able to afford the higher gas prices,” Rawlins-Fernandez said. 

At Fish and Dive, owner Tim Forsberg said he’s at the mercy of suppliers.

“I raise my prices according to what I have to pay,” he said. “No different than any other gas station. … I’m beholden to the big guys.”

Shortly after the war started, Forsberg said rates started climbing consistently “and probably will still go up, depending on what happens today,” which was when President Donald Trump threatened to annihilate “a whole civilization” if Iran didn’t reopen the Strait of Hormuz by Tuesday. The president later reneged on his threats. 

Forsberg said longtime Moloka‘i residents are used to paying higher prices for everything from gas to groceries, and that the increasing cost of oil would likely impact other essentials.

“Fuel is involved in all aspects of our life, from food production to transportation,” Forsberg said.

Across the channel on Lāna‘i, drivers have been spared the skyrocketing prices because the Lāna‘i Service Station is “heavily subsidized” by Pūlama Lāna‘i, Maui County Council Member Gabe Johnson explained. The company is the primary employer on an island that is 98% owned by Oracle billionaire Larry Ellison. 

“There’s a big sign in front of the gas station that says, ‘lowest gas prices in the state of Hawai‘i,’” Johnson said. 

Gas was $5.03 a gallon as of Thursday, according to Pūlama Lāna‘i. The company told the Hawai‘i Journalism Initiative in a statement that the gas station “has not experienced supply disruptions and we continue to work closely with our partners to ensure reliable service for the community.”

“While external conditions influence pricing and supply, our focus remains on keeping fuel available and as affordable as possible for residents and businesses,” the company said.

Lāna‘i City also benefits from being a roughly mile-long town where people can walk to the grocery store, Johnson noted.

“We can save a little bit of money if gas prices do go up,” he said.

Johnson drives a tiny Japanese kei truck that cost about $30 to fill up before the war. Now, it costs about $35. Still, “there’s no way I can confidently say that this town is affordable,” Johnson said. With the high cost of living and now the war in Iran, “there’s definitely anger in the community that I feel that people are just not making it.”

“At the end of the day, they’re either going to move away, or they’re just going to keep working themselves … until they get burned out,” he said. 

John Payton, vice president of retail with Par Hawai‘i, said the speed at which prices are going up “is just really unprecedented.” The company oversees 88 gas stations statewide, which include Hele and 76 brand gas stations, and directly owns and operates 33 of them.

“Every day when you wake up, you’re not sure what’s going to be happening in the global crude market,” Payton said.

Despite the rate increases, demand has been steady, declining only during the recent storms as fewer people were out on the roads and construction work paused, Payton said. At the Hele gas station in Kīhei’s Azeka shopping center, the worst recent hiccup was a buildup of mud from the flooding in March that had to be shoveled out.

Chee, of Island Energy Services, said demand tends to stay steady in Hawai‘i even when prices rise because people are driving out of necessity, but it dips on the Mainland as people curb long leisure road trips.

On Feb. 27, “the day before all hell broke loose,” the price at Uptown was $4.37 a gallon, Chee said. As of Friday, it was $5.79. 

Once prices go up, it takes awhile for them to come down — described in the business as “up like a rocket, down like a feather,” Chee said. After the start of the war in Ukraine, he recalled, it took about 14 months for prices to return to previous levels, and there’s no telling how long it will take this time.

Chee said when oil prices first spike, companies can’t keep up with the costs and are selling at a loss. When the price finally stabilizes and eventually drops back down, they’re still trying to recoup their losses and sell the fuel they bought at much higher prices. 

“People want to hold on as long as they can and enjoy perhaps the high margin, simply because now my cost is going the other way,” he said. “But at some point, competition kicks in, and people start to lower their price in order to attract more business.”

Alaska Airlines, which recently acquired Hawaiian Airlines, gets its lowest-cost fuel from Singapore, which represents about 20% of its total supply, according to Alex Da Silva, regional communications director in Hawai‘i. Those refining margins have surged 400% since early February, from an average of 45 cents to $2.25 per gallon, while U.S. refining costs are up about 140%.

However, the company has raised its fares by just about 10% across its network, Da Silva said. It has also worked to modernize its fleet and operations to become more fuel-efficient, including investing in sustainable aviation fuel.

“Fuel is among our largest operating expense, and we do everything we can within our control to minimize the impact fuel price fluctuations have on our guests and business,” he said.

Pam Tumpap, president of the Maui Chamber of Commerce, said ongoing high gas prices could have ripple effects, not only on the wallets of residents but also on the tourism industry, Maui’s primary economic driver.

Pricier plane tickets mean higher costs for residents traveling interisland and could also lead to fewer visitors, less business for local retail shops and farms, and an overall slowdown in an economy that, even before the war, was still recovering from the long-term effects of the pandemic and the 2023 Maui wildfires. 

“Uncertainty in business is a huge problem,” Tumpap said. “And there is a lot of uncertainty going on.”

Chee said no prior crisis compares to the current one. In 2022 when Russia invaded Ukraine, the price of oil spiked during a period of about three or four weeks before leveling off as the shock of the ongoing conflict wore off. During the COVID-19 pandemic, “oil prices didn’t shoot up, but the demand for products went to zero.”

In the current war, “nobody can say how this is going to unwind itself.” 

“I don’t know if we’re truly at the peak (in prices) right now, although there are signs that we might be,” Chee said. “But again, if the talks don’t work over the weekend, if some renegade operative fires a missile in the wrong place, this thing could go in another direction.”