[ OUR OPINION ]
THREATENED by the prospect of an end to enormous profits, oil companies are suggesting that competition in the marketplace be allowed to determine prices at the gas pump. Under normal circumstances, that would be a reasonable explanation, but the gasoline market in Hawaii is broken and prices are set by what the industry acknowledges is an oligopoly. Price caps are a method of reflecting competition that actually occurs on the mainland. Gas-price measure
must not be delayed
THE ISSUE The Legislature is considering measures that would cap retail gasoline prices.
As expected, the industry is complaining that the Cayetano administration's proposal to control gasoline prices is another case of Hawaii's anti-business attitude. A Chevron official calls it "one more example of the deteriorating business climate in Hawaii." Information gathered in the state's price-fixing lawsuit against the oil industry shows otherwise: Hawaii has been the industry's cash cow.
Calls for further study of the issue are nothing more than delay tactics, and politicians who favor such a delay do so at considerable risk. The gathering of information in the state's lawsuit amounted to a comprehensive study.
The state, which had sought $2 billion from the lawsuit, accepted a mere $35 million settlement because it could not pin down direct evidence to support its allegation of price-fixing. Industry officials had been carefully silent in their strategy of gouging the public while publicly blaming their high gas prices on business costs -- the so-called price of paradise. Information gained in the lawsuit proved that explanation to be false.
While gasoline competition on the mainland reflected sharply changing market forces from 1991-1999, the period on which the lawsuit focused, Hawaii's prices hovered comfortably above those prices, apparently unaffected. As a result, the oil companies reaped obscene profits from Hawaii; during a seven-year period, 22 percent of Chevron Corp.'s profits nationally came from Hawaii, which accounted for only 3.1 percent of its sales volume.
Gasoline prices in Hawaii have declined in recent months while rising on the mainland, an indication that political activity -- specifically, the price-cap proposal in the Legislature -- affects prices in Hawaii while market forces dictate mainland prices. Any claim that recent lower prices were caused by competition lacks credibility, considering the industry's past behavior.
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IN what has become an exasperating rite of spring, state lawmakers are again attempting to cobble together a budget with bits and pieces from special and revolving funds to cover perpetual revenue deficits. Every year, they dig a deeper hole for taxpayers by not attacking the core of the state's financial problem: Spending too much and taking in too little. Tough as it will be,
state should cut spending
THE ISSUE In shuffling special funds, lawmakers have failed to face the need to trim expenses.
This time, lawmakers can steal from the highway, affordable housing and agriculture loan funds, among others, but in years to come -- when they have scrounged all the loose change from under the sofa cushions
the state still will face shortfalls if it doesn't cut expenses or find a way to increase revenue. Meanwhile, roads will go without maintenance, low-income people won't have a house to call their own and a ripening agricultural industry will be uprooted. By doing without for the time being and hoping that the economy will improve, lawmakers are mortgaging Hawaii's future.
No one wants to cut needed services or to lay off workers. However, absent any plans for economic growth, the state must assess the efficiency of its operations and eliminate superfluous functions.
The city also appears to be struggling to make ends meet, but Council members are prudently resisting the financial shuffle. They have rejected Mayor Jeremy Harris's proposal to transfer sewer funds to pay for operations despite the administration's tactic of alarming the public by saying health and safety services would be threatened if the funds aren't surrendered. "Raiding funds is not the way to balance the budget," said budget chairwoman Ann Kobayashi. Her voice apparently isn't reaching the state Capitol.
Government must find a way to live within its means and making choices about what to eliminate won't be easy or pretty. However, postponing decisions only prolongs the pain and further weakens the state's financial footing.
The economic consequences of Sept. 11 have forced many businesses to trim their expenses. They did it because they had to. Government should do the same and lawmakers should find the backbone to do their jobs. As Kobayashi said, "We have to make these hard decisions."
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Published by Oahu Publications Inc., a subsidiary of Black Press.Don Kendall, Publisher
Frank Bridgewater, Editor 529-4791; fbridgewater@starbulletin.com
Michael Rovner, Assistant Editor 529-4768; mrovner@starbulletin.com
Lucy Young-Oda, Assistant Editor 529-4762; lyoungoda@starbulletin.comMary Poole, Editorial Page Editor, 529-4790; mpoole@starbulletin.com
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