Island residents are already feeling the pinch at the pump as the U.S. and Israel continue their war with Iran, but when it comes to their electric bills there’s going to be a slightly delayed reaction.
Despite efforts to transition to 100% renewable energy in the future, Hawaiʻi is still the most oil-dependent state, relying on burning oil to generate nearly three-quarters of its electricity. With global oil prices spiking due to the near total closure of the Strait of Hormuz, it was only a matter of time before those costs were passed on to island ratepayers.
Jim Kelly, spokesman for Hawaiian Electric Co. — which provides electricity to a majority of the state — said rates are forecast to increase 20% to 30% starting this month on Oʻahu, then in May and June for the neighbor islands.
Liberia-flagged tanker Shenlong Suezmax was able to carry crude oil from Saudi Arabia through the Strait of Hormuz and on to Mumbai, India on March 12. Although none of Hawaiʻi’s fuel travels that route, the islands are still subject to the ongoing global market disruptions. (AP Photo/Rafiq Maqbool)
While consumer gas prices shot up almost immediately after the war began, Kelly said, there’s generally a 60-day lag between the time Hawaiian Electric purchases its fuel oil and when those costs are reflected in ratepayers’ bills. How long the higher rates last, he said, will likely depend on the length of the war and its ongoing influence on global markets.
“We pass through all of the costs of fuel to the customers, meaning we’re not taking any kind of a markup,” Kelly said. “People have a lot going on in their lives, and I know this isn’t what they want to have to deal with. So I think we’re all hoping this is a short duration situation.”
The last time geopolitics had this kind of effect on electricity rates in the islands was in 2022 after Russia invaded Ukraine. But those increases — which ranged from 10% to 20% — came on much slower and over the course of several months, Kelly said, whereas the hit to ratepayers is landing much faster this time around.
“The scale is comparable,” Kelly said. “What’s different is the abruptness.”
Kelly said the entire situation, particularly as it relates to electricity, underscores the need to continue investing in renewable energy because it can cut out the volatility that comes from relying on imported fossil fuels.
“The whole idea of getting renewable projects online is not just about the price that we’re paying,” he said, “but it’s also about the stability.”
Kahe electric plant on the leeward side of Oʻahu has been powering the island for more than 60 years. (Craig Fujii/Civil Beat/2026)
On Kauaʻi, where renewables make up a larger share of the energy portfolio, ratepayers should experience less of a shock. Beth Amaro, spokesperson for the Kauaʻi Island Utility Cooperative, said in an email that rates are expected to increase in April from $0.38 to $0.43 per kilowatt hour, which equates to about a 13% increase. For the average customer, she said, this will result in an additional $25 per month.
“Fortunately, 50% of KIUC’s power is generated from fixed-price renewable sources which aren’t impacted by global oil pricing,” Amaro said. “This buffers our members from these spikes and will be even more effective as we move toward 100% renewable generation.”
An Unexpected Vulnerability
Although none of Hawaiʻi’s imported oil comes through the Strait of Hormuz, the islands are still subject to ongoing global market disruptions tied to the war in Iran.
Eric Wright is president of Par Hawaii, which runs the state’s only oil refinery and is the sole importer of crude to the islands. He said Hawaiʻi’s fuel supply is stable for the near term, but that he expects prices to remain high for the foreseeable future, although even that can be hard to predict given the constant shifts in the market.
“The market is so dynamic and things happen every hour,” Wright said. “And I don’t like to make predictions because who could have predicted this?”
One of the main vulnerabilities for the islands has been jet fuel, he said, because Par can only produce about half the state’s commercial and military supply at its refinery from the oil it imports. The rest is shipped in, mostly from South Korea. But as global supplies have tightened, countries across Asia that rely on oil coming through the Strait of Hormuz, including South Korea, have implemented export controls aimed at keeping other critical fuels closer to home.
Hawaiʻi relies on jet fuel imported from South Korea more than any other country, according to data collected by the Hawaiʻi State Energy Office. Click here or on the image to see the interactive dashboard. (Source: Hawaiʻi State Energy Office)
Jet fuel prices have already more than doubled from last month, according to the International Air Transport Association, and airlines have already acknowledged that they’ll have to pass along those costs to customers.
With the costs of refined fuel soaring, Alaska and Hawaiian Airlines are trying to mitigate the impact on travelers, according to spokesman Alex DaSilva, raising fares “just about 10%” to account for increased fuel prices.
“That impact is across our network,” he said, “including fares to, from and within Hawai’i.”
The prospect of flights being cancelled and residents being unable to travel between islands because of a lack of jet fuel was a “totally unacceptable outcome,” Wright said, so Par began pursuing a limited Jones Act waiver to bring in the fuel from the U.S. mainland.
Eric Wright, president of Par Hawaii, said prices will likely remain high for the foreseeable future. (Courtesy: Par Hawaii)
The Jones Act is a century-old federal maritime law that requires goods shipped between U.S. ports to be carried on U.S. vessels. But its critics, including economists and politicians, such as U.S. Rep. Ed Case, have argued that its restrictions impede domestic trade and lead to higher prices. It also limited options for Par to bring in jet fuel from the mainland, Wright said, because there just aren’t many Jones Act-compliant tankers.
Par ultimately didn’t need a special waiver, however, because President Donald Trump issued his own 60-day reprieve from the law in an attempt to lower prices.
Trump’s waiver effectively solved the jet fuel problem, Wright said, at least for the time being. Without it, he said, he’s not sure what would have happened.
“I don’t know exactly how it would have played out,” he said, “but we would have done everything we possibly could kicking and scratching to find jet fuel and make sure the state doesn’t run out because that’s our job.”
In terms of what’s to come, Wright said he sees higher prices sticking around for the next several months even if the war ends tomorrow.
“I can’t create the future, but it feels like this isn’t something that gets solved overnight,” he said. “You have all these ships parked over there in the Middle East, oil production that’s offline and refineries that are getting hit so I think we’re going to see higher prices for several months.”
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