Senate bill lowers gas cap
The proposal would only calculate the base line, not set it
Current wholesale price caps on gasoline would be about 11 cents a gallon cheaper if spot prices from Singapore were used in calculating the price ceilings.
The inclusion of Singapore in the weekly price cap calculation is one change being pushed by Senate Consumer Protection Chairman Ron Menor (D, Mililani).
Although Menor has advanced a measure that would suspend the price caps indefinitely, it also requires the Public Utilities Commission to continue calculating price caps under a revised formula to serve as an indicator for determining if oil companies are setting exorbitant prices.
Price caps would be reinstated for two weeks if wholesale prices rose above the hypothetical caps for two straight weeks.
The current formula takes a five-day average of spot wholesale prices in the Gulf Coast, New York and Los Angeles to determine the weekly baseline for the caps. Under Menor's proposal, spot prices from Singapore also would be considered, and the highest average of the four markets would be discarded in setting the baseline.
The revised formula also would eliminate a 4-cent-per-gallon location adjustment factor and reduce by 4 cents the 18-cent-per-gallon marketing adjustment factor.
Both charges are added to the weekly base line to help wholesalers recover operational costs.
When factoring in Menor's proposed adjustments, the base line price for this week's cap would be about $1.7845, about 10.8 cents cheaper than actual caps, which are at their highest points of the year.
The difference results from reducing the fixed charges and replacing the highest five-day average, Los Angeles ($1.9370), with Singapore ($1.6662). The inclusion of Singapore in the calculations, Menor said, is based on the premise that it would be the most likely source of imported gasoline to Hawaii.
Estimated retail prices under the revised formula would range from $2.74 a gallon for regular on Oahu to $3.10 on Lanai, according to Star-Bulletin projections. The statewide average would be about $2.80 a gallon, about 9 cents below the average recorded yesterday by AAA's Fuel Gauge Report.
Menor said he feels his proposal strikes a compromise with the House, which is seeking to suspend the caps in July and ultimately repeal them.
"We (in the Senate) feel we need regulation in place, and this proposal will ensure that that sort of regulation continues," Menor said.
House Majority Leader Marcus Oshiro (D, Wahiawa-Poamoho) said members were still reviewing and evaluating the Senate proposal.
"It is an interesting suggestion," Oshiro said. "It may be unworkable, in that it sounds like and looks like the gas cap."
Star-Bulletin estimates are calculated using benchmarks listed by the Energy Information Administration, which vary slightly from prices listed by the Oil Price Information Service, or OPIS. The Public Utilities Commission uses OPIS prices in setting the weekly price caps.