Today’s Petroleum Market

Hawaii Market- Forward Look

Aloha’s Current Product Slate

• Aloha imported the State's first cargo of ethanol...over 5 million gallons.

• There are significant risks associated with handling non traditional products.

• It takes vision and an appetite to trade in large volumes of products.

• Aloha invested over $3 million in its infrastructure to prepare for ethanol.

• You have to know the markets that you are trading in... there is a learning curve on new products.

Ethanol -• The Hawaii petroleum industry requires 40-45 million

gallons per year. • We expect to continue importing ethanol for some time.• Will the price point be competitive?

Biodiesel -• Federal Tax incentives of $.50 per/gal for Non-ag and

$1 per/gal for Ag based products expire in 12/08. Extension? Expansion?

• Diesel powered passenger vehicles represent 4-5 % of the vehicles in the U.S.

• Bio products need to be competitive.

• Adding additional bio products to our slate could require infrastructure changes.

Biodiesel -• Where are the incentives?

• Federal capital investment incentives

- 30% credit up to $30,000 per project.

• Current State and County taxes on alternative fuels are reduced…. will that be maintained or expanded?

• More than 85% of current gasoline systems are not compatible with E 85.

• UL suspended its listings for any fuel system handling E 85.

• While no safety issues with E 85 dispensers have been reported, the recent stance by UL has left the industry in a state of confusion.

• Our challenge has been selecting locations to market E 85 ... systems compatibility and integrity.

• Investment per location could exceed $100,000.

Risks

• Growing energy crops gives pause to concerns - Water supplies

- Runoffs that may affect the quality of our pristine ocean water system

- Potentially increase in GMO attempts

• Bio energy production is risky- There are commodity risks in both feed stock supply

and end market demand.

Aloha Petroleumis willing to invest in the infrastructure

to distribute, store, and market bio-energy products;

dependent upon the commercial opportunity and the regulatory environment.