Oil prices affect Hawaii economy in many ways - Hawaii News Now - KGMB and KHNL

Oil prices affect Hawaii economy in many ways

HONOLULU (HawaiiNewsNow) -

Crude oil prices, half as much as last summer, are affecting the Hawaii economy in a lot of ways, ranging from electric bills to airline profits.

Airlines

Hawaiian Airlines, reporting a $69 million profit for 2014, said its fourth quarter net fell about a third to $11 million because its fuel hedge contracts backfired.

The contracts locked in prices that would have been a bargain had the summer fuel prices held, but were more expensive than actual spot market prices after oil plunged.

Tourism

Cheaper jet fuel is thought to have encouraged mainland airlines to keep flying some of their more marginal routes to Hawaii, resulting in more options for visitors.

The Hawaii Tourism Authority this week reported 2014 was another record year, with 8.3 million visitors spending $14.75 billion, but these figures beat HTA targets by such small degrees that those marginal flights may have made all the difference.

Electricity

Hawaiian Electric, which still burns oil for most of its power production, has seen a dramatic decline in its fuel bills, and this will be passed through to customer electric bills.

That will take a few months to happen, however, because the surcharge is based on four months' of costs.

And outside Hawaii…

+ Fourth quarter GDP – gross domestic product, the sum total of all goods produced and services rendered in the United States – grew at a pace of 2.5%, less than either the spring or summer quarters. But a substantial part of the different could be the smaller financial value of fuel transactions.

+ The new king of Saudi Arabia has fired a number of senior officials, but one official he's keeping is the OPEC minister.

+ In Russia, which depends heavily on oil revenue, the ruble is crashing. Today it takes 70 rubles to buy a dollar.

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