$2 gas angers drivers
A cap on pump prices set to
take effect July 1 ignites an
economic and legislative debate
In a state where record high national average gas prices look cheap, motorists are set to get relief with a first-of-its-kind law that regulates prices at the pump.
Or maybe not.
While a gasoline price cap passed by the Hawaii Legislature in 2002 is scheduled to take effect July 1, lawmakers are tinkering with changes that could result in further delays.
Gas station owners fear a retail gas cap would put them out of business. Refiners would like to lose the cap altogether. Proponents want it instituted sooner, rather than later.
"They seem to be backing off. It seems like they're afraid of it," said chiropractor Michael Joseph, 56, as he filled up his sport utility vehicle with regular unleaded at $2.01 a gallon last week.
Yesterday, AAA reported the average for a gallon of regular unleaded gas in Honolulu reached $2.04; on the Big Island, $2.12; and on Maui, $2.37. The national average remained at a record $1.75.
A Lundberg Survey yesterday reported the cost for a gallon of gas climbed to a record $1.80 average for all grades.
Like many island consumers, Joseph is tired of paying some of the highest prices in the nation for gas.
"I think it's a good idea. If you don't cap them, they're just going to keep squeezing us," Joseph said.
But Hawaii lawmakers are treading carefully as they move ahead with amendments to the law that would let the state set a maximum price at which regular unleaded gasoline can be sold in the islands.
As passed two years ago, the law would mandate a maximum pretax price for gasoline sold at wholesale and retail levels, tying the ceiling to a weekly average of prices in Los Angeles, San Francisco and the Pacific Northwest. That formula embarrassed supporters last year when West Coast prices briefly went above the Hawaii price. Critics said the gas cap would have driven up Hawaii prices.
Some legislators are seeking a delay, to allow further study of the formula and tie the maximum price to an average of prices nationwide. Other proposals include extending the cap to cover all grades of gasoline and applying it only to the wholesale price.
To frustrated consumers, some kind of control is long overdue.
"Whatever they feel they've got to take us for, they do," said Hans Hussey, 34, of Waimanalo. "We've got to pay it. It's not like we can go to the next state."
George Fox, president of the group Advocates for Consumer Rights, says if lawmakers want to change the law, they should still let it take effect right away.
Lawmakers who shepherded the proposal through the Democratic-controlled Legislature -- it was signed by then-Democratic Gov. Ben Cayetano -- say they remain committed to the law and are simply reworking it to address concerns raised since it was passed.
"We're going to figure it out by the end of session" in May, said Rep. Ken Hiraki (D, Kakaako-Downtown), House Consumer Protection Committee chairman.
Republican Gov. Linda Lingle does not like the price cap and said she believes it will cause shortages. However, she has not said she would stand in the way of regulations taking effect. The law allows the governor to suspend the cap if an economic analysis shows it would cause hardship.
Minority Republicans call the price cap anti-business, arguing that high taxes and barriers to competition such as Hawaii's isolation are what drive up costs.
House Republicans tried unsuccessfully last week to repeal the cap altogether. Senate Minority Leader Fred Hemmings (R, Lanikai-Waimanalo) calls it nothing more than an election year ploy to appease angry consumers.
"We're trying to help the consumers. I don't think that's playing politics," Hiraki counters.
Price cap supporters argue that oil companies have kept prices artificially high in Hawaii.
They often cite research released by the state attorney general's office in the late 1990s that showed Chevron Corp. (now ChevronTexaco Corp.) made about 23 percent of its profits in Hawaii, which accounts for only 3 percent of its market. ChevronTexaco says that in the last five years, its Hawaii business provided no more than 5 percent of its profits.
ChevronTexaco and Tesoro Petroleum Corp., which operate the only two oil refineries in the state, oppose the price cap, as do others in the local gasoline industry.
Small service station owners have pleaded that their overhead costs are already high and that a price cap would wipe out profits.
Terry McBarnet, one of 13 Hawaii "jobbers," middlemen who buy gasoline at wholesale and sell to service stations and other customers, said some arguments on oil industry profits are misleading and arise from selective legal arguments in a 1998 price-fixing lawsuit against the oil companies. Companies settled the lawsuit by paying the state $20 million in 2002.
McBarnet called for a policy based on facts rather than emotion.
"A lot of people are going to be affected here, and those people are going to be the people of Hawaii," said McBarnet, who also runs a gas station in rural Paia, Maui. "They're the ones that got to buy gas. They deserve a well-thought-out policy."
