Raising Cane
By Rob Perez
Gas-price bill in
precarious Senate spotFueled by revelations that oil companies made tremendous profits off Hawaii motorists in the 1990s and repeatedly misled state officials about it, legislators are soon hoping to pass the nation's only state law regulating gas prices, trying to bring relief to consumers at the pumps.
It's about time.
After gouging Hawaii motorists for years and earning what many critics believe were excessive profits, the oil companies need to be reined in, even if doing so triggers a court challenge, as it almost certainly would.
Whether the Legislature can muster the political will in the waning days of the session to defy an industry that has spent more than $200,000 over the past year or so on lobbying remains to be seen.
A House bill to cap wholesale prices sputtered in the Senate, thanks mainly to a few key senators, including one with ties to the industry's chief lobbyist.
And some lawmakers say those few senators still may be able to block passage of a relief measure despite widespread support in both chambers and the endorsement of Gov. Ben Cayetano's administration.
The issue is expected to come to a head this week as senators consider a new 11th-hour proposal, submitted Friday by the Attorney General's Office, to establish wholesale and retail caps on gas prices.
The AG bill is being considered as a possible alternative to the price-cap measure that passed the House 43-6 in late February and was sent to the Senate.
But Sens. Ron Menor (D, Mililani) and Cal Kawamoto (D, Waipahu), chairmen of the two Senate committees that the House measure was referred to, never held public hearings on that bill. The industry strongly opposed it.
The Senate instead passed a resolution calling for the formation of a committee to study the issues and recommend possible action for next year's Legislature. Critics saw that as an attempt to kill any price regulation.
Menor said there were serious legal flaws in the House measure, something the AG's office also indicated in coming up with an alternative proposal.
Menor and Kawamoto now are among the co-chairmen on the House-Senate conference committee considering whether a price-regulation bill can be agreed to and sent to both chambers for a vote before the session's scheduled adjournment May 2.
Under the Legislature's arcane rules, Menor and Kawamoto technically would be able to bottle up a bill in the conference committee even if the other 10 members approve it.
Menor said he would support the AG bill if it addresses the constitutional problems of the House measure, stands a strong chance of being upheld in court and provides effective relief to consumers.
"I think it's a no-brainer that Hawaii consumers are paying much too much for gasoline," Menor said. "But those who say we should pass anything, no matter how flawed, are just playing politics with the issue."
Kawamoto said passing a price-cap bill would be premature given the recent settlement of the state's $2 billion antitrust lawsuit that accused the oil companies of conspiring to keep prices artificially high.
Legislators should wait to see whether the companies decide on their own to lower gas prices, Kawamoto said. "We don't want to get involved with their decisions and micromanage," he said.
Kawamoto also raised concerns about the AG proposal being submitted so late in the process.
But Sen. Avery Chumbley (D, East Maui) said a clear majority of senators want to take action this session and plan to do so even if that means having to resort to unusual measures to force the issue.
"Between now and Friday, something will happen," Chumbley said. "People want this."
Chumbley said yet another approach -- establishing a public hearing process that would be triggered whenever prices exceed certain benchmarks -- also is being considered.
Rep. Ken Hiraki, one of the sponsors of the bipartisan House bill, said he is optimistic a price-cap measure will pass this session.
Such optimism would have been considered far-fetched early in the session, when various price-regulation bills were given little chance of succeeding. But the push for action was heightened in recent weeks by the release of previously confidential documents in the antitrust lawsuit.
The documents indicated that the Hawaii market was immensely profitable for the oil companies during the 1990s, much more so than anywhere else in the country. The documents also bolstered the state's contention that company executives repeatedly misled legislators, state officials and the public when questioned about Hawaii profits and pricing.
The bill that the AG's office proposed would set a wholesale cap based on certain West Coast pricing and other factors. It also would establish a weekly maximum pretax retail price for self-serve regular unleaded gasoline. In addition, it would cap what oil companies can charge dealers for rent.
Proponents of a price-cap bill have identified Menor as a key figure in explaining why the measure hasn't moved in the Senate. One reason, they said, may be his ties to Linda Rosehill, an oil industry lobbyist who is supporting Menor's possible bid for lieutenant governor this year.
From January 2001 through February of this year, Rosehill's firm was paid nearly $200,000 to lobby for the Western States Petroleum Association, according to the most recent lobbying records filed with the state. (Several companies also pay for their own lobbyists.)
Menor denied his ties to Rosehill influenced his actions on the price-cap legislation. "It's really a nonissue," Menor said, adding that Rosehill has not lobbied him about the bill at all.
To prevent any appearance of impropriety, Rosehill said she has refrained from lobbying Menor on any legislation since early in the session, when questions were first raised publicly about the issue.
She continues lobbying other legislators, telling them that no one has thoroughly studied how price caps would affect the Hawaii market, what unintended consequences could happen and what alternative measures should be considered.
"This is being done completely in the blind," she said.
Boosting such arguments, Aloha Petroleum told Menor last week that the limits in the House proposal would result in retail prices under which the company could not be profitable.
Many legislators aren't swayed by such arguments. They say the industry has reaped excessive profits for years at the expense of consumers, and action is needed now to prevent continued gouging, even if the law needs to be revised later.
"This is like we're in the emergency room, and we're doing ER medicine to stabilize things. Then we can move to more longer-term solutions," said Rep. Ed Case (D, Manoa).
If legislators don't act now, Case and others say, it will be much harder to pass something next session.
Information from the antitrust lawsuit is fresh on people's minds, and with all legislative seats and the governorship up for grabs in November, taking action now can be seen as a popular election issue.
Already, two gubernatorial candidates have announced support for government intervention. Case favors price caps, and Democrat D.G. "Andy" Anderson says the state should enter the gas business and compete with the oil companies.
Mayor Jeremy Harris, according to his campaign committee, takes the position that a price cap is not the best fix. "In fact, it is more of a Band-Aid than a solution because it does not address the root cause of Hawaii's high gasoline prices," his committee said.
To counter Hawaii's high dependence on fossil fuels, Harris believes the government should encourage consumers to use public transit and more fuel-efficient vehicles, benefiting their pocketbooks and the environment.
Republican gubernatorial candidate Linda Lingle said she favors studying the issues to identify the problem and the best way to solve it.
"We need to avoid rushing into an election-year solution," Lingle said.
No matter what happens, though, the Legislature's action -- or inaction -- is bound to become an election-year issue.
Star-Bulletin columnist Rob Perez writes on issues
and events affecting Hawaii. Fax 529-4750, or write to
Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210,
Honolulu 96813. He can also be reached
by e-mail at: rperez@starbulletin.com.
