Let's remove rules and regs that keep Hawaii's gas price high

Recently, speculation about the difference between Hawaii and mainland gas prices -- which on any given day might be more or less than it was under the gas price cap law -- has predictably produced calls for the renewal of that measure. This is a bad idea. Our brief and unhappy experiment with price controls cost Hawaii's consumers an estimated $55 million in just five short months, according to the Department of Business, Economic Development and Tourism. That's an $11-million-a-month experiment we can ill-afford to try again.

A number of analyses (Federal Trade Commission, Stillwater Associates) concluded the gas cap introduced a high level of volatility into Hawaii gas prices that had been absent before the cap was imposed. The removal of the cap restored a level of stability.

We will tie ourselves in knots, and cost consumers a great deal of money, by trying to outsmart and second-guess the transportation fuels markets that establish retail gasoline prices. The more important lesson we should all take from the gas cap disaster is that we need to stop trying to legislate or mandate our way to energy security and economic prosperity. It simply never works, no matter how attractive and popular it might seem.

Everyone in Hawaii knows we live in splendid isolation, thousands of miles from many of the goods we need to make our lives livable. We know we pay more for virtually all of the things we purchase. It's a premium of sorts for the privilege of living here. We might not like it, but we understand it. This is not to suggest that we should simply accept this economic burden, especially when it seems the premium is too high or unfair. We can and should do something about it.

That brings us back to the critical question: Do we continue to rail against the unfairness of it all and pass legislation we hope will bring prices down but never does? Or do we embrace the power and efficiencies of the marketplace and begin to tear down the wall of anti-competitive laws and regulations that have done nothing but harm consumers in the Aloha State?

According to the Federal Trade Commission's 2003 report, "Price controls usually create shortages, reduce quality, and generate inconvenience for consumers when they are imposed in markets that could be competitive. The more consumer-friendly way to reduce gasoline prices in Hawaii would be through policies that reduce costs and/or promote competition."

This wise advice seems to be borne out by results of the gasoline price cap legislation. In the months leading up to May's repeal of the gas cap law, gasoline prices set by the law were rising steadily and swiftly, according to the AAA survey. In the months following the repeal, average gasoline prices have been on a slow but steady downward march. Hawaii has the unfortunate distinction of being the leader in trying to suppress the beneficial effects of a dynamic and competitive marketplace. We took an important step in a smarter direction when we repealed the gas cap law.

Now it's time to finish the job and remove the other anticompetitive laws and regulations that distort our local markets. Hawaii's consumers deserve the break.