Gas price cap draws interest across nation
WHILE OIL COMPANIES face criticism and congressional hearings into their record profits at a time of high energy prices, some state legislatures are increasingly asking whether laws such as Hawaii's wholesale gasoline price cap could benefit their constituents, one analyst said.
Supporters of Hawaii's legislation have been buoyed by five straight weeks of decreases in the price caps, which represent the maximum at which gasoline can be sold at wholesale in Hawaii.
Caps for next week, published yesterday by the Public Utilities Commission, are 3 cents lower than current price ceilings. By Monday the price cap will have gone down 80 cents since Oct. 17.
John Felmy, an economist and director of the Washington, D.C.-based American Petroleum Institute, said the issue of price caps has come up repeatedly as he has testified before various state legislatures.
"In almost all cases, they have asked about price caps," Felmy said yesterday in a telephone interview from Washington.
"Maybe it is that it's part of my overall spiel, and I mention it briefly and they explore it a little bit further," he added, "but in at least half the cases, it was explicit asking about it."
Felmy said in recent weeks he has discussed energy issues before lawmakers in several states, including New Jersey, Delaware, Colorado, Wisconsin, New York, Rhode Island, Missouri, Kansas and California.
He said the reaction to price cap proposals has been consistent among older lawmakers who remember attempts by the federal government to control gas prices in the 1970s.
"Virtually everybody who asks says, 'Well, I remember gas lines, so I'm really not willing to look at that right now,'" he said. "But it's kind of funny, because it's only for those people who are old enough to remember gas lines."
He said younger lawmakers have given "mixed feedback" on proposed price caps.
Hawaii's price cap is based on an average of spot prices in the Gulf Coast, New York and Los Angeles. Fixed costs to account for profit margins and the cost of delivering gasoline to other islands are added to the baseline average to come up with the price caps.
The law took effect Sept. 1, just as the first of two hurricanes ravaged Gulf Coast oil operations, sending prices nationwide to all-time highs.
As oil operations have recovered and prices in the Gulf and elsewhere have stabilized, so, too, have Hawaii's prices.
"More and more consumers are starting to support the fair gas price law after five weeks of steadily falling prices," said House Majority Leader Marcus Oshiro (D, Wahiawa-Poamoho).
Supporters say the law is forcing Hawaii's prices to follow more closely to mainland trends, unlike in the past when they were slower to come down when prices elsewhere decreased.
Critics say island prices also went up at a slower rate when mainland prices increased, and argue that but for the law, Hawaii's prices would not have increased so dramatically after the hurricanes, because the island's two refiners obtain most of their oil from Asia and Alaska.
Opponents note that Hawaii's prices continue to lead the nation.
Hawaii's statewide average of $2.82 a gallon for regular yesterday was 12 cents above runner-up Alaska and 46 cents above the national average, according to AAA's Fuel Gauge Report. The auto club bases its survey on credit card transactions from the previous day at more than 66,000 stations nationwide, including 222 in Hawaii.
Next week, if wholesalers charge up to the maximum allowed, the statewide average for regular could go to about $2.72 a gallon, according to Star-Bulletin projections.
The cheapest gas would be on Oahu, at $2.56 a gallon after taxes. The highest-priced gas would be on Lanai, at $2.92 a gallon.
Estimates assume a dealer markup of 12 cents, although such charges vary from station to station and are not governed by the price cap.