Tuesday, September 9, 2003

Report says gas
caps won't work

Legislators disagree over
the validity of the state-funded
study's conclusions

A $250,000 state-funded report on Hawaii's plan to cap local gasoline prices says government control will not work.

State of Hawaii The recommendation instead is for the state to do a better job of monitoring gasoline prices, step up consumer education and clear government roadblocks to competition.

The recommendations are in line with what Republican Gov. Linda Lingle has said. Last year, she campaigned against the gas cap law, Act 77, and urged that it be scrapped. The law is scheduled to take effect in July.

The validity of the report immediately became a partisan battle among legislators.

Yesterday, as the report on the gas cap was being unveiled, Democratic U.S. Rep. Ed Case criticized the report.

"The report started from the conclusion that Act 77 should be repealed," Case charged.

The report, prepared by petroleum consulting firm Stillwater Associates, said, "Price caps do not promote a more competitive environment."

The report notes that the two oil refiners in Hawaii, ChevronTexaco Corp. and Tesoro Petroleum Corp., can make more money here than in other locations because of their power to dominate a concentrated market.

They are able to do this, the report said, "by being able to maintain relatively high margins on gasoline sales."

"However, their overall profitability is not beyond reasonable returns on investment," the report said.

Yesterday's presentation was not significantly different from a preliminary report released in January, but this time, gas cap supporters have formed an organization to back up the call for price controls.

The group, Citizens Against Gas Price Gouging, also condemned the report.

"We may be paying as much as 60 cents a gallon too much for gasoline, something like $250 million a year that is going out that should not be going out and should be in our pockets," said Richard Miller, former dean of the University of Hawaii law school and a member of the citizens group.

The group also sniped at Lingle, noting that Chevron contributed to Lingle's campaign and donated $67,500 to Republican candidates last year.

"Everyone is calling our governor 'Chevron Linda,'" said Frank Young, a former retail gasoline dealer and frequent critic of the local gasoline industry.

However, the actual gas cap law, passed in 2002, had both Republican and Democratic opponents. Several key Democrats opposed it.

Republican Sen. Fred Hemmings responded to the criticism, saying the study was commissioned and the consultant hired by former Gov. Ben Cayetano, a Democrat.

"This is all politics at its worst," Hemmings said. "Case and the others are being deceptive."

Democrats complained the report was late and that Lingle was timing the release to influence debate on it.

Four Democratic legislators, Reps. Hermina Morita and Ken Hiraki and Sens. J. Kalani English and Ron Menor, protested the tardy report, which they said should have been made public in May.

"We believe the long delay challenges the objectivity and credibility of those professionals who contributed to the report," the four said in a letter to the state administration.

"Some of their recommendations could hurt consumers," Menor said.

The full report is available at


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