Gas cap hearings begin as price projections inch up

Wholesale price caps on gasoline are expected to increase again next week. Price caps, which went up 4 cents this week, are forecast to climb another 4 cents by Monday, according to preliminary calculations by the Star-Bulletin.

Meanwhile, two bills related to the price cap law are scheduled for hearings today.

In the House, the Finance Committee is scheduled to hear a proposal to suspend the price cap starting in July and in its place adopt strict oversight measures of the oil industry. The proposal in House Bill 3115 already has advanced through a preliminary vote taken by the full House.

In the Senate, Consumer Protection Chairman Ron Menor (D, Mililani) is holding the first public hearing on his proposed amendments to the price cap law. Among other adjustments, Senate Bill 2911 would add Singapore to the three U.S. mainland markets used for determining the cap and discard the highest of the four markets in setting the weekly base line; eliminate a 6.5-cent zone adjustment for Oahu; and adjust the marketing margins to account for different wholesale transactions along the gasoline supply chain.

Menor, who contends the adjustments could result in savings of about 16 cents per gallon, has said he has no plans to grant a hearing to any proposal to repeal or suspend the cap as the House is proposing.

House leaders say they will force the issue to further debate in joint House-Senate conference committee near the end of session.

Majority Democrats in the House had previously supported the price cap law but now say more needs to be done because the Public Utilities Commission has not utilized its authority to make adjustments and enforce the law the way they envisioned.

"Not only do we need to look at transparency -- as far as revealing the true cost and the fair rate of return for the oil companies -- but how do you get the PUC to implement the law most vigorously to benefit the consumers," said House Majority Leader Marcus Oshiro (D, Wahiawa-Poamoho). "Our review of the PUC's actions of the past six months leave my confidence shaken in its ability to enforce the law to benefit consumers."

Lisa Kikuta, chief researcher at the PUC, said the commission has implemented the law in accordance with its written intent, which states that the caps are not intended to lower prices, but to ensure that Hawaii's prices reflect competitive market conditions similar to the mainland.

She added that the PUC has vigorously reviewed transactions to determine if oil companies are violating the law while evaluating data to determine whether any adjustments should be made.

"The PUC has exercised its discretion in the best interest of consumers within the parameters of the law, and has refrained from making any unsupported arbitrary changes," Kikuta said in an e-mail message.

Meanwhile, the increase in this week's price cap reversed a three-week decline in which the ceilings dropped 29 cents and reached the lowest levels of 2006.

Under next week's caps, if wholesalers charge the maximum allowed and dealers include a markup of 16 cents, the estimated price for regular gasoline is expected to range from $2.61 a gallon on Oahu to $2.98 a gallon on Lanai.