Gas price cap due for slight dip
Legislators continue to tinker with the law that influences prices
Wholesale price caps on gasoline are going down by less than a penny next week, but even the tiniest of decreases marks a turnaround from five straight weeks of increasing cap numbers.
Caps set yesterday by the Public Utilities Commission are 0.04 cents lower than current price ceilings, which are at their highest points of 2006.
Meanwhile, the Senate is moving this week on a proposal that would suspend the price caps indefinitely but also require the Public Utilities Commission to continue calculating hypothetical price caps under a revised formula to serve as an indicator for determining if oil companies are setting exorbitant prices.
Under that revised formula, price caps for next week would be about 12 cents lower, according to Star-Bulletin calculations.
Senate Consumer Protection Chairman Ron Menor (D, Mililani) included the proposal in House Bill 3115, Senate Draft 1, in an effort to strike a compromise with the House, which is seeking to suspend the caps in July and ultimately repeal the law.
Under Menor's proposal, price controls would be reinstated for two weeks if actual wholesale prices rose above the hypothetical caps for two straight weeks.
The Senate Ways and Means Committee is expected to advance the bill. It would then face one more vote by the full chamber before going to the House, where leaders say they are evaluating the proposal.
If no compromise is reached, the current law would remain in effect.
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 base line for the caps.
Under the actual caps for next week, retail prices are expected to remain largely unchanged. They are forecast to range from $2.93 a gallon for regular on Oahu to $3.30 on Lanai, while the statewide average is likely to be near $3, according to Star-Bulletin projections.
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 base line.
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 -- added to the weekly base line to help wholesalers recover operational costs.
When factoring in Menor's proposed adjustments, the base-line price for next week's cap would be about $1.7691, about 12.3 cents cheaper than actual caps.
The difference results from reducing the fixed charges and replacing the highest five-day average, Los Angeles ($1.9805), with Singapore ($1.6636) -- which legislators say would be the most likely source of imported gasoline to Hawaii.
Yesterday's statewide average reported by AAA's Fuel Gauge Report was $2.92 a gallon, 42 cents above the national average.
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.