On September 1st Hawaii will become the first state in the U.S. to apply a cap to the wholesale price of gasoline. Hawaii's gas prices are the highest in the nation at an average of $2.84/gallon for regular unleaded. The cap is meant to prevent the state's two refineries from taking advantage of the islands' small, isolated market by charging inflated prices. It's based on an index calculated from the three large mainland markets of L.A., New York harbor and the U.S., and then allowances for shipping costs are added. The retail price of gas will not be capped, however, so if these measures adversely affect the supply chain that supplies Hawaii then the price of gas at the consumer level could end up rising anyway.


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