Gas cap repeal gains steam
A proposal backed by 12 House Democrats joins Republicans in opposing the state law
A dozen House Democrats are joining Gov. Linda Lingle's call to repeal the state's gasoline price cap law, the only one of its kind in the nation.
Their decision sets up an election-year clash with Senate leaders who believe the legislation has enough support to withstand any such challenges.
"This is a difficult issue and, obviously, supporters would not claim that there is unanimous support," said Senate Consumer Protection Chairman Ron Menor (D, Mililani). "Nevertheless, I remain confident, as one of the key proponents of pricing regulation, that there still is majority support in the Legislature for this."
Menor and other Senate leaders unveiled a package of proposed amendments to the price-cap law that they say could bring down gas prices by about 16 cents a gallon.
But some House members are ready to scrap the law altogether.
A proposal sponsored by seven Democrats and co-signed by five others seeks an outright repeal of the law that was first passed in 2002 and revised in each of the following years.
"With 12, I think that there's more than overwhelming support to repeal," said House Speaker Calvin Say (D, St. Louis Heights-Wilhelmina Rise-Palolo Valley), who supports the price cap but said it will be up to the caucus whether the repeal proposal receives a hearing.
"If the pressure from our caucus is that we do pass it out, I'll be open to passing it out," he said.
Rep. Joe Souki, the lead sponsor of the repeal, said he does not believe the cap is working and he hopes colleagues will give serious consideration to a repeal.
"I think there's a lot of people, more and more now, that are looking at 'we need something else,'" said Souki (D, Waihee-Wailuku), who has opposed the price cap in the past. "I would like to see the House push a measure like this out so that the Senate can kind of re-look at that situation."
Word of the proposal was welcome news to Republicans.
"We're totally in agreement with it," said House Minority Leader Lynn Finnegan (R, Mapunapuna-Foster Village). "We don't think it's working at all and there's other ways that we can move forward on the gasoline issue."
Although she did not mention it in her State of the State speech Monday, Lingle said afterward she was committed to pursuing a repeal.
Meanwhile, after a 6-cent decline in the price caps for this week, the price ceilings are projected to increase by about 3 cents for next week, according to preliminary Star-Bulletin calculations.
If wholesalers charged up to the maximum allowed and dealers added a markup of 16 cents, the cost of regular unleaded is expected to range from $2.80 a gallon on Oahu to $3.17 a gallon on Lanai.
Yesterday's statewide average for regular was $2.88 a gallon, 55 cents higher than the national average, according to AAA's Fuel Gauge Report.
Hawaii's price caps are set using an average of spot wholesale prices in the Gulf Coast, New York and Los Angeles to determine a baseline. Fixed charges are then added to account for oil companies' profit margins and operational costs such as shipping, delivery and storage to different islands.
The resulting price represents the maximum at which wholesale gas can be sold.
Menor said his amendments address the concerns being raised by critics and fellow Democrats.
One key change would add Singapore to the three mainland markets used for setting the baseline. To avoid factoring in price spikes from a single market, the highest average of the four markets would be discarded each week in determining the baseline.
Other changes include eliminating a 6.5-cent-per-gallon fixed charge added to the wholesale price of gas on Oahu and replacing the 4 percent general excise tax with a fixed tax of 8 cents per gallon.
"These amendments clearly are pro-consumer," Menor said.
Echoing statements made by the governor, Democrats who support the repeal say they believe the gas cap was passed with good intentions, but it has not proven to be effective.
"You cannot fault the Legislature for doing it," Souki said. "They wanted to do something to affect the situation that we had. In good faith, the Legislature -- at least the majority -- felt that the gas cap was what we needed.
"I don't think it has worked."
Souki and others said they support making more information on gas pricing available to the public along with measures to strengthen anti-trust laws, reduce barriers to competition and support the development of alternative fuels.
"It's not just we're against the gas cap," said Rep. Kirk Caldwell (D, Manoa), one of the 12 who signed the repeal measure.
Others Democrats who signed the repeal proposal were neighbor island Reps. Cindy Evans, Bertha Kawakami, Kameo Tanaka, Clifton Tsuji, Ezra Kanoho and Bob Nakasone; and Reps. Jon Riki Karamatsu, Jerry Chang, Michael Magaoay and Glenn Wakai from Oahu.
PROPOSED GAS-CAP AMENDMENTS
Changes to the state's gasoline price-cap law being proposed by Senate lawmakers include:
» Adding Singapore to the three mainland markets used for setting the baseline. To avoid factoring in price spikes from a single market, the highest average of the four markets would be discarded each week in determining the baseline.
» Eliminating a 6.5-cent-per-gallon zone price adjustment added to the wholesale price of gas on Oahu.
» Replacing the 4 percent general excise tax with a fixed tax of 8 cents per gallon.
» Adjust fixed costs to ensure that jobbers -- middlemen who buy gas at wholesale and deliver it to smaller, remote stations -- are able to recoup more of their delivery costs.
» Require that the Public Utilities Commission base its calculations on benchmarks listed for "conventional" regular unleaded. Senate leaders say data show the PUC has been using benchmarks for more expensive "reformulated" gasoline available in the Los Angeles market.
Source: Senate Consumer Protection Committee Chairman Ron Menor