Lawmakers defer
gas regulation

Officials prefer competition
over state control

By Rob Perez
Star-Bulletin

Despite the large disparity between Hawaii and mainland gas prices, the state wants nothing to do with regulating local pricing.

Two bills designed to establish government-set benchmark limits for wholesale gas prices in Hawaii were deferred yesterday by the House Energy and Environmental Protection Committee, all but assuring the proposals won't pass this session.

"The general feeling was regulation is not the answer," said Rep. Hermina Morita, the panel's chairwoman.

Most of those who spoke or submitted written testimony on the bills said competition in the marketplace, not government intervention, is the most efficient way for prices to be set.

Even the state attorney general's office, which has sued Hawaii's oil companies for allegedly conspiring to fix prices, pooh-poohed the idea of regulation, as it has done in past sessions.

Ted Clause, a deputy attorney general, told the committee that a competitive market is the best way to get lower prices. While Hawaii's market is not competitive because the oil companies have engaged in antitrust behavior, Clause said, the lawsuit is intended to restore competition.

The oil companies have denied the state's allegations and have asked a federal judge to dismiss the case.

Others who opposed the bills yesterday included the state Public Utilities Commission, which under one proposal would have been given regulatory authority over wholesale gas prices.

The state Department of Business, Economic Development & Tourism also said it favors a free-market approach, as did a representative for Tesoro Hawaii, which runs one of Hawaii's two refineries and owns a chain of gas stations here.

Government regulation of private businesses is inherently inefficient, cumbersome and costly, said attorney John Komeiji, who represents Tesoro.

But proponents of the measures said the marketplace is not working as it should. While crude oil and mainland pump prices have plummeted recently, Hawaii prices have come down only slightly, costing consumers millions of dollars in overcharges, they said.

"Bold measures have to be taken if we are going to revitalize our economy and give small businesses a break," said Chevron dealer Frank Young.

Morita (D, Haiku, Hana) said the committee deferred the bills -- instead of killing them -- in case a vehicle is needed next session for legislative action. Bills that aren't killed this session carry over to the 2000 session, the second year of the legislative biennium.

The benchmarking bills were introduced by Rep. Terry Yoshinaga (D, McCully).