Declining oil prices are giving consumers a big break in their wallets, bigger than some might think.
Relief at the pump continues as the state average on gasoline has fallen to $3.42 per gallon, down six cents from last week.
Many businesses are saving money and passing those savings onto their customers.
At Watanabe Floral, workers are getting ready for Valentine’s Day and for customers, it means a special promotion.
“One of the things we’re going to do is some free delivery dates, virtually island-wide, from Kapolei to Hawaii Kai to Kaneohe,” said Monty Pereira of Watanabe Floral.
The Kalihi florist has offered free delivery before, but is expanding the promotion this year. Customers have oil prices to thank.
Watanabe Floral says it has been able to save and customers will benefit.
Longer prices and more sales could be a trend for many businesses.
Experts also predict increased spending by visitors and residents.
“Consumer confidence and gas prices move very, very closely together,” said Carl Bonham, UHERO executive director. “I think it’s fairly safe to say that consumers are going to spend a fair amount of these drops in these energy costs.”
And, according to research, consumers will likely spend it on items like cars, food and electronics.
They could even spend it on flowers. Watanabe Floral says last month, business increased 10 percent from the same time last year, and attributes a large part of it to falling oil prices.
“I just think the consumer, all of a sudden you’re putting less in the tank, your electricity bill is down, you start to get more confidence that you have more money and you’re apt to spend it,” Pereira said.
Pereira says employees also benefit. The company just gave workers a bonus and said one of the reasons was the money they were able to save from lower oil prices.
Experts also believe if people continue to spend, companies could hire more workers to keep up with an increase in business.
Bonham says if the cost for crude remains in the $50 range, gas could drop to another 60 to 70 cents a gallon.
Meanwhile, for a second month in a row, Matson announced it is lowering its fuel surcharge effective Jan. 18, this time by four percentage points for its Hawaii, Guam/CNMI and Micronesia services.
The fuel surcharge for Hawaii will be reduced from 35.5 to 31.5 percent; Guam/CNMI, 36 to 32 percent; and for Micronesia, 41 to 37 percent.
According to Dave Hoppes, senior VP of ocean services, the reduction in shipping costs ranges from $80-$140 per container.
“This is the third consecutive decrease we have made to our Hawaii and Guam/CNMI fuel surcharges,” Hoppes said in a prepared statement. “With this latest reduction, our fuel surcharge for those services will have dropped 11 percentage points since November 2, 2014. … We will continue to monitor fuel costs and adjust the surcharge accordingly.”
Below is an estimate, provided by Matson, of how the savings would break down when applied to specific goods:12 ounce canned beverages
51,744 cans per 40-foot container
Reduction : – $143/51,744 = 0.28 cents per can (1/4 of a cent per can)Heads of lettuce
24,000 heads of lettuce per 40-foot container
Reduction: – $204/24,000 = 0.85 cents per can (approx. 1 cent per head)20 pound bag of rice
2,280 20 pound bags of rice per 40-foot container
Reduction: – $119/2,280 20 pound bags = 5.22 cents per bagLumber (2 x 4)
3,550 2’ x 4’ per 40-foot flatrack
Reduction: – $76/3,550 = 2 cents per 2 x 4