Why I voted against repealing the gas cap
WE ALL KNOW that the oil companies are hammering Hawaii residents at the pumps. How do they do it, you ask? The oil industry in Hawaii is essentially an oligopoly (controlled by just two major oil companies).
The only effective way the state has to protect consumers from the power of the oil industry to raise prices to artificially high levels is to modify the gasoline price cap law that sets a maximum wholesale price the oil companies can charge to service stations.
The unfortunate timing of Hurricane Katrina -- which disrupted oil production just as Hawaii's gas cap went into effect last September -- along with the Public Utilities Commission's catering to the oil companies at the expense of Hawaii residents, has resulted in many drivers becoming disillusioned with the performance of the law. The state Senate has passed a bill that modifies the formula the PUC uses to set the cap. The refinements in the bill install safeguards against regional price hikes from disasters such as hurricanes, and they reduce the oil companies' profit margins in a manner that, if enacted, could save consumers up to 16 cents per gallon in the future.
The House also passed a bill. The House measure does three things:
» eliminates the gas cap entirely;
» replaces the gas cap with "transparency" rules that require the oil companies to make certain limited disclosures to the PUC; and
» makes unfair trade practices by the petroleum industry unlawful.
IF ENACTED, the House bill would allow the oil companies to raise prices to any level they wanted ... $4 ... $5 ... you name it. The sky's the limit.
Here's an example at the retail level: You go to work in the morning and see stations at an intersection all charging $2.55 per gallon. By lunchtime, they all have moved to $2.65.
Look like price fixing to you? Sure it does. While price fixing has always been illegal, proving it in a court of law is a little vague. What's happening here is tacit collusion without actually breaking existing antitrust laws.
The House bill purports to be a transparency bill. I support the transparency concept as a means of increasing knowledge of oil companies' activities. (I even introduced a transparency bill this session myself.)
But the House bill I was asked to vote on, which is currently awaiting a hearing in the Senate, is not a true transparency bill. A true transparency law would require oil companies to report price change details, including the amount, time and date of the change, and to make this information public.
The bill that passed the House only requires the companies to report an average weekly wholesale price, which allows the companies to conceal actual pricing activity. And even this narrow snapshot is to be kept confidential -- not shared with the media, the public or even the Legislature. Under this transparency bill, anyone at the PUC who would allow a Hawaii resident to actually see any information would risk losing his or her job and be subject to criminal penalties.
Let's go to the section of the House bill where the oil companies are forbidden from using unfair trade practices. Well, $4, $6 or whatever at the pump is not illegal under the "Unfair Trade Practices" section. Could it somehow at least help? Sorry. All the practices that are listed as unfair are either so vague as to be totally unenforceable in court or have always been illegal under existing federal and state laws.
While real transparency (which is missing from the House bill) could help, increased monitoring cannot on its own provide the protection Hawaii needs.
The House and the Senate have passed two different bills. Add the state administration's views to the mix and we have a disparity that needs to be resolved.
Part of the Legislature's job is to provide protection for the people of Hawaii against retail prices for essential products that are artificially high. The decisions we make must be in your best interest and not politically driven.
The House bill as it stands removes the only protection we have against artificially set prices! It is flawed. We need a measure that increases competition and transparency without removing the only law that prevents the oligopoly that controls our supply of motor fuel from raising prices even higher.
Rep. Bev Harbin, a Democrat, represents the 28th District (Downtown, Chinatown, Kakaako, Iwilei, Keeaumoku/Sheridan).