Hawai'i motorists could see a more than 40-cent-a-gallon drop in the price of regular gasoline next week.

The state's wholesale gasoline price cap will likely tumble by as much as 44 cents when it is adjusted on Monday, according to Advertiser calculations. The state, which put into effect the nation's only gasoline price limits on Sept. 1, will announce today the official wholesale price for next week.

"I'm definitely going to hang tough until Monday," said Michael Naylor, a Hau'ula arts administrator for the state. Naylor said he will get by on the half tank of fuel left in his 2002 Nissan Sentra until he can buy cheaper gasoline.

While drivers will be squeezing by on fumes, dealers face a drop in business for the remainder of the week.

"Immediately everyone is going to be ... letting their tanks run down," said Bill Green, former gas station owner and now consultant to Kahala Shell. "When that sort of thing happens, no one can run a rational business."

Planning purchases from suppliers along with scheduling employees to meet rising and falling sales has become more difficult, Green said.

Last Sunday night, Green said, he saw 25 cars lined up at an Aloha Petroleum station at 10 p.m. as drivers were trying to fill up before the price cap went up by a planned 9 cents the next day.

"It is frustrating for us, the dealers, and the consumers because prices are constantly fluctuating," said Burt Chinen, owner of Burt's Union Service on North School Street.

The average retail price of a gallon of regular on O'ahu was about $3.40 on Monday, according to the AAA Hawaii's Daily Fuel Gauge report. If retailers pass along the expected 44-cent drop in the wholesale price, the price at the pump could drop to $3 or slightly less on O'ahu.

The decline in the Hawai'i gas cap comes as Mainland gas prices dropped because more refinery capacity was restored following Hurricanes Katrina and Rita. The average pump price for regular gasoline nationwide fell 8 cents to $2.848 a gallon over the past week.

SWINGING PRICES

Hawai'i's price-cap law sets a maximum wholesale gasoline price based on prices in Los Angeles, the Gulf Coast and New York plus an adjustment for delivery and marketing costs. The retail price is not capped, so dealers are free to charge whatever they want.

The price cap was not designed to lower gasoline prices, but to force local prices to track more closely to Mainland prices, according to supporters of the Democrat-created law.

Frank Young, a former station owner and proponent of the cap law, said he believes there will be less price volatility now that price shocks from the Gulf Coast hurricanes are subsiding.

He said stations may also be learning to operate better with the price swings. Young said the average station may need to get new inventory deliveries every two to three days.

A station owner who has gasoline that was bought before the cap declined may drop prices more quickly to sell through the inventory in a few days rather than losing customers to stations with cheaper gas, Young said.

He said consumers should start seeing lower prices Monday, with more stations offering the cheaper gas on Tuesday.

WAIT UNTIL MONDAY

Consumers, meanwhile, are calculating how they can save enough gas to get through to next week.

Sno Roberts estimates it now costs him more than $100 to fill up each of the 1988 Ford cargo vans for his Pacific Island crafts business at the Aloha Stadium Swap Meet.

He has enough to get by until at least Monday, so he won't be buying again this week.

"I've already figured that one out," Roberts said. "I'm not going to be buying until next week."

While a drop in prices will be welcomed by drivers, not many consider $3 a gallon to be cheap.

"Every time I drive up to the pump and see how high gas prices are, I get angry," Naylor said.

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com.