Gas price won’t
move Lingle

The governor must see clear
damage to suspend the price cap

While gasoline prices could hit $3 a gallon under price controls set to take effect Sept. 1, Gov. Linda Lingle says high prices alone will not be enough for her to step in and suspend the regulations.

Lingle said yesterday her administration is working on identifying what conditions would have to be met in order for her to use her executive powers to halt the so-called "gas cap."

"I won't hesitate to step in and stop it if I think it's hurting the economy or hurting the public health and welfare," Lingle said yesterday.

In an informal meeting with reporters last week, Lingle said high prices alone would not cause her to intervene.

"Minor inconveniences will not be enough," she said.

Lingle said last week and again yesterday that the cap would have to cause some tangible negative impact before she would act.

"If emergency vehicles couldn't get fuel because a shortage was created, that would be a reason to step in immediately," she said. "If I determine that somehow firefighters couldn't get fuel -- or the police or ambulances -- I'm not going to wait any length of time at all if it starts to impact them."

The first maximum price for wholesale gasoline is scheduled to be posted by the state Public Utilities Commission on Wednesday. It is to be adjusted each week after that, based on changes in market conditions in Los Angeles, New York and the U.S. Gulf Coast.

If the cap were in place today, the maximum wholesale price at which regular unleaded gasoline could be sold on Oahu would be $2.27 per gallon, based on market conditions in the three key markets during Aug. 10-16. The cap is higher for higher grades of gasoline and on neighbor islands after adjustments to account for shipping, storage and other operational costs.

After taxes, the price at the pump on Oahu would be about $2.86 per gallon, a figure that does not include any markups that dealers could charge. Dealers have traditionally tacked on a 12-cent markup.

Even at $2.86 per gallon, the cost would be higher than the average $2.68 per gallon reported yesterday in Honolulu by AAA's Fuel Gauge Report.

Prices on Maui would be about $3.03 per gallon, not including any dealer markup, compared with AAA's listing of $2.97 per gallon yesterday in Wailuku. Hilo prices would be about 16 cents higher than the $2.79 per gallon average reported by the auto club.

The law sets no cap on retail prices, although supporters of the cap say they expect competition at the retail level to keep prices in line with market conditions.

Supporters say the law should be given a chance to work.

"At this point it's something new, and a lot of the answers remain to be seen," said Rep. Ken Hiraki, one of the key authors of the price cap law that was passed in 2002 and revised twice since.

Lingle said she does not expect the law to bring down prices, but she hopes she is wrong.

"This has never been implemented before on a statewide level anywhere in America," she said. "It's impossible to determine in advance what the impact will be."