Raising Cane
By Rob Perez
Sunday, January 20, 2002
Oil lawsuit is a
victory for knowledgeIt might not seem like a victory, but Hawaii consumers can claim one as the state prepares to settle its price-fixing lawsuit against the oil companies.
You didn't get a guilty verdict.
You didn't get sanctions prohibiting future violations.
You didn't get bunches and bunches of money.
At a reported $20 million, some folks are disappointed in what the state would get under a proposed agreement with the oil companies to settle the case. The government had been seeking roughly $2 billion on your behalf, alleging that the oil companies conspired to overcharge consumers for years.
If the tentative settlement is approved by the court, the state won't be getting anything even remotely close to the $2 billion. Even with the $15 million that two companies previously paid to settle the case, the amount the defendants ultimately will fork over totals less than 2 percent of what the state sought.
Given the companies' financial might and the hundreds of millions of dollars in alleged overcharges, that's little more than chump change.
And from the settlement pot the state must pay several million dollars to the private attorneys hired to pursue the lawsuit, plus cover other expenses related to the case. The remaining funds likely would go into a state highway fund.
That will be your money, in effect, to fix public roads and highways.
But you also got something else from the case, something that in some respects is far more valuable, far more empowering than the money. You got knowledge.
After more than three years of watching the two sides duke it out in court, Hawaii consumers now know a lot more about how the oil companies price gasoline than before the state filed the lawsuit in October 1998.
You now know that Hawaii for years has been the most profitable market in the country for the companies.
You know that Hawaii's highest-in-the-nation gas prices have more to do with big profit margins than the cost of doing business here.
You know that Hawaii is an oligopolistic market with only a few gas suppliers and very stable demand, providing little incentive for the companies to lower prices and engage in price wars.
The defendants have basically acknowledged as much in the course of fighting the state's lawsuit.
Such knowledge, of course, won't pay the bills. It won't send your kids to college or serve as a down payment for a new home. It won't even prevent the industry from squeezing big-time profits from Hawaii consumers in the future.
But at least the companies can't hoodwink you any more. They can't say very convincingly that gasoline costs more in the islands for the same reason cereal, milk and eggs cost more.
If oil prices plunge and pump prices follow suit everywhere but in Hawaii, the companies can't attribute that to local fuel taxes, either. Even though the tax tab on Oahu is among the highest in the country, it hasn't changed in at least a decade.
So if they mention taxes, you'll know better.
Pump prices will be at lofty levels because a few oil companies control the market and can charge whatever the market will bear.
But knowledgeable consumers, with the help of media and government scrutiny, can provide a countering influence. They likely already have.
It's probably no coincidence that between the time the state launched its gas-price investigation nearly four years ago (triggered by a series of Star-Bulletin stories) and the proposed settlement was announced last week, local pump prices rose an average of less than 2 percent, while the national average jumped nearly 11 percent.
Just like it probably was no coincidence that in 1999, the first year after the filing of the lawsuit, Oahu pump prices fell an average of about 4 percent, while national prices soared 40 percent. That was the only year in the 1990s that local prices didn't move in the same direction as national ones.
Coincidence? Hardly.
Gov. Ben Cayetano was among those who said he was somewhat disappointed in the proposed settlement, details of which have not been released yet.
But Cayetano also put a positive spin on the development, noting the benefits the antitrust lawsuit brought in keeping pump prices in check.
He also said the state's action put the oil companies on notice, letting them know the government was paying close attention to what happens with pricing.
To keep the pressure on, you should, too.
Star-Bulletin columnist Rob Perez writes on issues
and events affecting Hawaii. Fax 529-4750, or write to
Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210,
Honolulu 96813. He can also be reached
by e-mail at: rperez@starbulletin.com.
