Find a way to monitor oil companies' pricing practices
The Legislature may consider a method of forcing oil companies to divulge factors resulting in gasoline prices.
GOV. Linda Lingle is unlikely to reinstate gasoline price caps, mistakenly blamed for last year's high costs at the pump. With her support, legislators should focus in their new session on establishing a mechanism that sheds light on oil company practices resulting in prices that again approach $3 a gallon.
The caps, pegged to mainland rates, allowed prices to rise to $3.68 in the weeks following the Aug. 29, 2005, destruction of Gulf Coast oil facilities by Hurricane Katrina. After Lingle signed legislation lifting the caps last May, Hawaii's gas prices rose to a dime per gallon more than the caps would have allowed. Prices last weekend averaged $2.92 a gallon, highest in the nation and nearly 70 cents above the national average.
In the final days of last year's session, legislators approved a measure requiring the state's two oil refiners to periodically disclose the amount of gasoline sold, wholesale fuel prices they charge, their operating expenses and profit margins. Lingle signed the bill into law and continues to support "transparency" of the industry.
As legislators begin this year's session, the information sought from the required disclosure is unavailable. The Public Utilities Commission's information-gathering process appears to have been slow from the start because the Legislature provided only $1 to collect and analyze the industry's pricing information. The transfer of $316,000 to the commission from other agencies for the effort is evidence of Lingle's support.
The commission has hired an economist and is negotiating with a company that would create a database to analyze the information, according Lisa Kikuta, the commission's chief researcher. The analysis "hasn't come together as quickly as some people would like," she says.
Further difficulties may surface from the possible refusal of the refiners to disclose information they regard as proprietary. "Some of the information that they are asking for is very sensitive," says Chevron spokesman Albert Chee.
Gasoline prices have cooled down since oil prices peaked at a record-high $77 a barrel last July, have fallen 16 percent since the beginning of the year and now stand at less than $52 a barrel. Producers Venezuela, Algeria and Iran talk about cutting production quotas, which would raise oil prices, but Saudi Arabia's oil minister foresees higher prices even without quota reductions.
Reinstating the price caps during a period when mainland prices are likely to rise would risk creating the misimpression that the caps only make matters worse. The Lingle administration and Legislature instead should work toward creating a price-monitoring method that would be effective while not infringing on the companies' legal right to confidentiality.