Gathering Places
Gathering Places
It is easy to say we live in a global village. It is something else again to cope with forces that affect small businesses here in Hawaii. A changing
marketplaceHypermarkets have come to the islands from the mainland. They are big-box retailers that offer gasoline as a traffic builder for their locations, meeting consumer demands for one-stop shopping. They include companies like Costco, Wal-Mart, Sam's Club, Safeway, even Jack-in-the-Box.
When a hypermarket offers lower priced gasoline, independent gasoline dealers are jeopardized. The small dealer was never meant to compete against the hypermarket. Gas station dealers are like other small businesses and should be allowed to steer their futures like anyone else, without restrictions imposed by the state.
But a dealer seeking to sell his business is handicapped because current, so-called "divorcement" laws dictate that a prospective buyer, most likely an oil company, must turn over the station to another dealer within 24 months or close the station. Oil companies are reluctant to invest under those circumstances.
Many dealers would like to sell the business or enter into an arrangement whereby the supplier prices the gasoline and the dealer operates the other services. This would allow suppliers to compete against hypermarkets, and would benefit consumers and dealers alike.
Thus they are asking that the 24-month restriction be lifted. That protectionist language is no longer effective. Current laws have built a box around the dealer to protect him from his supplier. Oahu Chevron dealer Barnaby Robinson says dealers need this "escape hatch" to do business freely.
This change would not, however, allow oil companies to monopolize gas stations. The strategy of predatory pricing would be lowering prices to drive out competition, then ratcheting up prices once monopoly is achieved. This strategy has yet to be successful.
Second, oil companies do not want to buy every gas station. There are a host of economic criteria that must be met. Traffic patterns, existing competition, anticipated or existing volume, and current operations are but a portion of the process. Not all locations will pass the test.
Third, oil companies will still compete with each other. Competition drives prices down, which is good for the consumer.
Maui Chevron dealer Alvin Makimoto echoes Robinson: "The changes in the marketplace are happening so fast that everybody has to change, too. We want the ability to make the decision with all the options, whether selling or contracting, without the restrictions."
Eric Lee, vice president and general manager of Tesoro Hawaii believes that a bill passed by the Senate may send a signal that the retail divorcement law passed in 1997 is not working. Instead, the law has caused unforeseen problems and undesirable consequences." Tesoro favors repealing the law to "allow all parties the benefit of operating in a free and open market."
A free and open market can only be maintained by adjusting to changes realistically.
J. Kalani English is a Democratic
state senator representing the 5th District
(Kahului-Upcountry Maui).