[ OUR OPINION ]

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Hawaii Labor Day
is in the black

THE ISSUE Hawaii can feel comfortable this Labor Day with jobless rates and employment gains that are the envy of most other states.

THIS Labor Day in Hawaii may be punctuated by the bus workers strike, but all is not so bleak. Hawaii's unemployment rate is well below the national average, and the state's percentage of employment gains over the past year led the nation. Tourism seems to be on the rise, and with that comes cautious optimism about Hawaii's economy and labor scene.

National labor leaders are not so upbeat. "Far too many people are out of work and many have been out of work for a long time," says John Sweeney, president of the AFL-CIO. "White-collar as well as blue-collar employees are losing jobs, and many of these jobs aren't coming back."

That is likely to be a major theme among Democratic challengers of President Bush in next year's election. More than a million jobs have been lost since the official end of the recession in November 2001.

Hawaii can't complain, basking on an employment gain of 2.5 percent over the past year -- far ahead of any other state. The nation's unemployment rate for July was 6.2 percent, but Hawaii's rate was only 4 percent, ranging from 3 percent to just over 4 percent over the past year -- a range generally regarded as full employment, in which everybody who wants a job can get one.

As Americans return from their summer vacations, the tourism industry can look back at a successful season. Hotel occupancy rates in July were up on every island except Molokai from July 2002, when the tourism industry still was reeling from the effects of the Sept. 11, 2001 terrorist attacks. Preliminary indications were that the summer rates also would be better than those of 2001, prior to the attacks.

Nationally, travel analysts and executive are not so optimistic, partly because business travel is down. The leisure travel industry is more buoyant, with revenue per available hotel room increasing in eight of the last nine weeks.

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Gasoline price cap
will have its moment

THE ISSUE Gasoline prices on Oahu have reached a record high of more than $2 for a gallon of regular, but prices in California are even higher.

GASOLINE prices on the mainland have soared in recent weeks, while prices at Hawaii's pumps have cruised along at record levels, unaffected by the peaks and valleys of competitive markets. Gasoline price caps scheduled to take effect next July would not help now, because they will be based on California prices that now are even higher than those in Hawaii. The caps will be effective only when competition drives prices down in California.

Average prices of regular gasoline in Oahu were a record $2.017 a gallon in the past week, more than 4 cents above a month ago, and an average of $2.374 on Maui. ChevronTexaco Corp. calculates that the state caps, if they were in effect, would limit Oahu prices to $2.42 a gallon. The caps will tie Hawaii prices to weekly West Coast prices, which now surpass Oahu prices after a 36-cent rise in two weeks.

Those prices have prompted California Lt. Gov. Cruz Bustamante, a gubernatorial candidate in the recall election, to call for changing the state's constitution to allow regulation of gasoline prices by the state Public Utilities Commission. Gov. Gray Davis says he will consider the proposal, assuming he is not recalled.

When the prices of crude oil fell after the start of the war in Iraq, mainland gasoline prices dropped accordingly, but Hawaii's prices stayed the same. Fereidun Fesharaki, a petroleum expert at the East-West Center, explained to the Star-Bulletin's Tim Ruel that Hawaii's two refiners, ChevronTexaco and Tesoro Petroleum Corp., are reluctant to drop their wholesale prices because they don't know when crude prices will rise. Refiners on the mainland would like to exercise such caution, but they face competition.

Fesharaki suggests that the state enhance competition by publicizing where gasoline can be bought at relatively low prices, such as Costco in Waipio. However, those gas stations are few and out of the way for most residents.

Even with the gas caps, Hawaii drivers will have to contend with a petroleum duopoly -- what an industry's lawyer has called an oligopoly -- that follows a pricing practice called "conscious parallelism." In such a market, the industry leader sets the price, which becomes uniform by being followed by nominal competitors. The practice does not violate antitrust law.

The practice has allowed the oil companies to make obscene profits in Hawaii, amounting to 22 percent of Chevron's national profit from 1988 to 1995. The companies are not likely to dramatically lower or raise prices unless forced to do so. Price spikes will remain a mainland phenomenon, and prices will drop in Hawaii only when price caps require it.