Bills poised to help ease gas price rise

Gas prices should drop 10 cents a gallon as an ethanol-blended gas tax exemption will be restored

The price of gasoline could go down by a dime July 1, and if it doesn't, lawmakers feel they should be able to know why.

Final approval is expected this week on a pair of bills aimed at helping consumers deal with the cost of gasoline in Hawaii.

One proposal, House Bill 1757, would restore a general excise tax exemption, that expired this year, on fuel blended with ethanol. Meanwhile, Senate Bill 990 provides $1.2 million to the Public Utilities Commission to carry out data collection and publishing requirements approved by lawmakers last year.

"I think that the transparency law will enable the state government and the public to be able to monitor whether the oil companies and other petroleum distributors have passed on savings to consumers at the pumps," said Senate Energy Chairman Ron Menor (D, Mililani).

Hawaii's statewide average of $3.18 a gallon yesterday was the fourth-highest in the country, behind three western states, and prices are likely to climb in the next few months as the mainland's summer driving season approaches.

If approved by the governor, H.B. 1757 would take effect July 1. At current prices, the savings on a gallon of regular unleaded gasoline would be about 10 cents. The state's loss in tax dollars is estimated at $32 million.

The proposal carries a requirement that the excise tax savings be passed along to consumers, with violators subject to a fine of $100,000.

At least one distributor, Aloha Petroleum, has committed to passing on the savings.

"If Aloha reduces its price by 10 cents per gallon, the rest of the market where Aloha competes will have no choice but to follow," said Aloha President and Chief Executive Officer Bob Maynard in a message to lawmakers.

Many retailers have said they also would like to pass along tax savings to consumers, but that doing so is often difficult because they operate on razor-thin margins.

Critics of "big oil" have long alleged that such tax exemptions can be eaten up by refiners that increase wholesale costs to distributors and dealers, forcing a corresponding rise in pump prices.

Oil companies say that's not true, and that wholesale prices are set competitively at market levels.

Consumer advocates say the data collection and reporting requirements in S.B. 990 should shed light on what goes into the cost of gas, allowing consumers to decide for themselves whether they feel prices are being set fairly,

The so-called transparency provisions were passed last year as part of suspending the state's wholesale price caps on gasoline, but the Public Utilities Commission was unable to carry out the law because no funding was provided.

This year, Gov. Linda Lingle's request of $1.2 million to implement the law was granted by the Legislature.

"The PUC has no further excuses to make in regards to moving ahead with the implementation of the transparency provisions," Menor said.

Oil companies would be required to make regular reports to the PUC on how much fuel is refined and sold, how much profit they make, distribution costs and other information. The state would be required to analyze the data. If any wrongdoing were found, findings would be forwarded to the Attorney General's Office to determine whether an investigation was necessary.

The commission also would be charged with determining what information to make public, without disclosing competitive, proprietary information.

Lingle said she was pleased with both measures, but said lawmakers need to look at the bigger picture on why Hawaii's gas prices are high.

"I do expect to see prices drop because of the restoration of the tax exemption," Lingle said, "but I think there has to also be a long-term recognition that the price of gasoline and the price of oil are determined, to a large degree, by forces outside the state as well as by our own tax structure."