Friday, August 13, 1999

Gasoline-Paying the Price

Hawaii isn’t only state
probing gas prices

Bullet The issue: The state of Alaska is investigating why it has the highest gasoline prices in the country, following Hawaii's decision to sue the oil companies.

Bullet Our view: Hawaii must show a conspiracy to fix prices and allocate market share in order to prevail in its suit.

THE state of Hawaii is suing major oil companies, seeking $2 billion in damages for allegedly gouging motorists with high gasoline prices. And Hawaii isn't alone in making such complaints. California launched an investigation after gasoline prices soared last spring. Now the state of Alaska, with the nation's largest oil field, wants to know why it has the highest gas prices in the country.

Alaska Attorney General Bruce Botelho has been investigating the fuel business in his state. His office has issued "civil investigative demands" to eight companies that refine or sell fuel products in Alaska, asking questions about their costs, their profits and how they go about deciding what motorists pay for a fill-up.

According to an analysis the attorney general's office filed in Superior Court in Anchorage court last week, Alaska consumers pay on average more for gasoline than residents in any other state. The state says those high prices can't be blamed on high taxes, transportation costs, wage and manufacturing costs or a gasoline shortage.

The analysis notes that refiners in Alaska have ready access to abundant, nearby oil sources, and average hourly manufacturing wages in Alaska are nearly $2 less than the national average.

In Hawaii, the state filed suit last October, alleging that Hawaii's gasoline wholesalers and two refiners fixed gasoline prices at an artificially high level and agreed to allocate market shares among themselves in violation of federal and state antitrust laws.

Since the suit was filed, gas prices here have dropped. Former Attorney General Margery Bronster credited the decrease to the state's action.

Last month the state filed an amended complaint accusing the market leader, Chevron Corp., and other defendants of fraudulently concealing information to hinder the state's investigation of whether the industry was reaping excessive profits. Chevron denied concealing information.

Unlike Alaska, Hawaii has no petroleum resources at hand. Oil must be shipped thousands of miles to reach island consumers. Moreover, wages and other costs are above the national average.

Still, it appears that the Hawaii market has been a highly lucrative one. According to an internal Chevron document cited by the state, the local Chevron refinery generated 14 percent of the company's U.S. profits while processing only 3 percent of its crude oil.

But it's not enough to show that the oil companies made big profits in Hawaii. The crux of the issue is whether the oil companies conspired to fix gas prices and allocate market shares. The state must show that a conspiracy existed in order to prevail in its suit.

Labor’s Walter Kupau

WALTER Kupau, who collapsed and died Wednesday at 63 of an apparent heart attack, was the longtime leader of the Carpenters Union here and one of the most controversial figures in the labor movement in Hawaii.

Kupau was financial secretary and business representative for the 6,800-member Local 745 of the Carpenters Union for 21 years and the highest paid union leader in the state, earning more than $250,000 a year. He was a former president of the Hawaii State Federation of Labor, AFL-CIO.

In September 1997 the Carpenters Union ratified a five-year contract negotiated by Kupau with 400 contractors that will raise carpenters' hourly pay to $30.90 in 2002.

Tony Rutledge, leader of the hotel workers union, said Kupau's legacy to his union is one of the finest wage and benefits packages in the country.

Kupau did not shrink from using hard-ball tactics, as he did in 1996 in withdrawing nearly $30 million in Carpenters Union funds from First Hawaiian Bank. It was retaliation for City Councilman Arnold Morgado's role in blocking the city's rail transit project, which Kupau supported. Morgado was an employee of the bank and was running for mayor.

Also in 1996, Kupau threatened to stop construction of the H-3 freeway until it could be blessed a second time by a Hawaiian priest after a section of the highway in Halawa Valley collapsed and four workers were injured.

In 1983, Kupau was convicted of six counts of perjury in a case involving Walter Mungovan, a Maui contractor. The case centered on Kupau's denials that his union improperly used pickets to try to organize Mungovan's construction company. Mungovan, who charged that the union destroyed his business, was placed in a federal witness protection program on the mainland.

Kupau was sentenced to two years in prison and fined $10,000. He served six months at the federal minimum security prison at Lompoc, Calif. But he emerged from prison unabashed and soon resumed his union duties.

In 1971 the outspoken Kupau urged Hawaiian groups not to oppose the appointment of Matsuo Takabuki to the Bishop Estate Board of Trustees.

The appointment had received heavy criticism because Takabuki was not Hawaiian. But Kupau, who was half Hawaiian, said Takabuki's race should not be an obstacle.

Walter Kupau brought the same combativeness to his work on behalf of the workers he represented, and won major contract improvements for them at the bargaining table. With his death a major figure in Hawaii's labor movement has been lost.

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John M. Flanagan, Editor & Publisher

David Shapiro, Managing Editor

Diane Yukihiro Chang, Senior Editor & Editorial Page Editor

Frank Bridgewater & Michael Rovner, Assistant Managing Editors

A.A. Smyser, Contributing Editor

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