[ OUR OPINION ]
Governor can’t squirm free
from gas price caps
THE ISSUE
The state Senate has approved amendments to the gasoline price cap law enacted by the 2002 Legislature and due to take effect July 1.
THE state Senate's approval of amendments to the gasoline price caps enacted by the Legislature two years ago sends a resounding message that the caps are inevitable, barring litigation. The proposed changes would improve the law by pegging the caps to the national average instead of West Coast prices, put lids only on wholesale prices, not both wholesale and retail, and apply to all grades of gasoline, not just regular unleaded. Even opponents of the caps must concede they are better with the changes than without them.
The 18-5 Senate vote made clear that the Legislature is not about to repeal the law, which Governor Lingle opposes. The amendments correct flaws cited by opponents of any price caps but don't come close to appeasing them; the dissents were in apparent protest of any gas price caps.
Either with or without the changes, the price caps are destined to take effect unless the Legislature repeals them by the end of next year's session, which is unlikely, or the petroleum companies persuade a judge to block their imposition.
The 2002 law allows the governor to suspend the caps if she determines that they will "cause a major adverse impact on the economy, public order, or the health, welfare or safety of the people of Hawaii." If she delays the caps, they will remain suspended only through the next session of the Legislature or until the effective date of "any legislative enactment intended to address the major adverse impact." Lingle's veto of such remedial legislation would backfire, triggering the price caps the very next day, according to the law.
Neither the current law nor the legislation provides Lingle much wiggle room. The law calls for the Public Utilities Commission to implement the price caps on July 1. The statute renders Lingle powerless to delay them beyond May of next year -- the end of the regular session -- or much earlier if legislators merely go into special session and immediately adjourn or meet in a special session to override any veto of the gas cap amendments or, for that matter, any other bill.
The Senate bill's only change to the gun-to-the-governor's-head provision of the law would require Lingle, in delaying its implementation, to specify how the price caps would be harmful, which she undoubtedly will assert anyway. Those arguments were contained in a report last September by Stillwater Associates, a California petroleum consulting company hired by the Cayetano administration to evaluate the effect of the price caps.
Stillwater found that gasoline price caps failed wherever they had been tried and "would bring volatility, market distortions and opportunities for profiteers to game the market" in Hawaii. San Francisco attorneys who represented the state in a price-fixing lawsuit against oil companies derided the Stillwater study as "company friendly" and unrealistic.
The Stillwater report and the responses provided an opportunity for this year's legislators to review the 2002 law. Legislators remain firm about imposing price caps on what an oil company attorney acknowledged during the price-fixing lawsuit to be an "oligopoly." The preface to the current legislation concludes that Hawaii's high gas prices are "principally due to a lack of vigorous competition at the wholesale level among members of the oligopoly."
