[ OUR OPINION ]
Pressure oiligopoly
to lower gas prices
THE ISSUE:
Court documents have revealed information about gasoline prices charged by major oil companies in Hawaii.
OIL oligarchs have been pulling a fast one on Hawaii consumers, claiming competition at the gas pump when none existed. The state's lawsuit against the companies has provided valuable information for devising ways to achieve true competition, or at least public exposure of oil industry greed. Legislators should use that information to help consumers.
The Attorney General's Office agreed to drop its price-fixing lawsuit against six major oil companies in return for their $35 million payment to the state. As the Star-Bulletin's Tim Ruel reported on Sunday, that may be a pittance of the $2 billion sought in the lawsuit, but the unsealing of documents admitted in the case could make the legal effort worthwhile. The documents show:
Jeff McElroy, Chevron's Hawaii region marketing manager, told state legislators in 1995, "Competition is alive and well in Hawaii at both the wholesale and retail levels."
>> In 1989, when Shell Oil Co. was telling the state that it did not break down its national revenue and income to the state level, the company actually was keeping track of such information not only for states, but for individual gas stations. >> About the same time, Texaco Inc. was claiming ignorance about profitability in Hawaii while projecting its 1990 income from the state at $6 million, a return of 42 percent on its $14.5 million in isle assets. >> From 1988 to 1995, Chevron Corp.'s profits from Hawaii's refinery sales through dealers was $101.2 million -- 22 percent of the company's profit nationally. During the same period, Hawaii's sales volume accounted for only 3.1 percent of the company's national market. When the state asked for financial information in 1989, the company produced densely detailed information but neglected to inform the state of its "blue books," reports that were intended to make the information easy for company executives to comprehend. However, in baffling candor, Tosco Corp. attorney Maxwell Blecher painted a truer picture in court hearings last November: "Once you decide it's an oligopoly, you've got an explanation for the phenomenon of the high prices, the high margins, the high profits, the lack of vigorous price competition. That explains it all."
The oil companies maintained that the lack of competition did not necessarily amount to price fixing, as the state argued. However, Hawaii legislators should recognize that no member of the oiligopoly is likely to lower gasoline prices under the present system. At the very least, financial reporting requirements are needed to create public pressure.
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Published by Oahu Publications Inc., a subsidiary of Black Press.Don Kendall, Publisher
Frank Bridgewater, managing editor 529-4791; fbridgewater@starbulletin.com
Michael Rovner, assistant managing editor 529-4768; mrovner@starbulletin.com
Lucy Young-Oda, assistant managing editor 529-4762; lyoungoda@starbulletin.comJohn Flanagan, contributing editor 294-3533; jflanagan@starbulletin.com
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