Gas cap captures
nation’s interest

Whether it is denigrated as pointless and stupid or being hailed as long-overdue consumer protection legislation, there is no shortage of opinions on Hawaii's one-of-a-kind gasoline price cap law.

And it's not just here at home.

From California to Cleveland, the Maui News to MSNBC, a Google news search of "Hawaii gasoline prices" indicates the world is watching.

"I have done at least 15 interviews in the past two days about Hawaii," said John Felmy, an economist and director of the American Petroleum Institute, an oil and natural gas industry trade group in Washington, D.C.

Paul Brewbaker, chief economist at the Bank of Hawaii, said he also received several calls from national news outlets, as well as inquiries from colleagues at other financial institutions about the so-called "gas cap."

Senate Consumer Protection Chairman Ron Menor (D, Mililani) also appeared on national news airwaves.

"The sense I'm getting is that there are many people on the mainland that are following developments here in Hawaii, because if the gas price cap works, as I anticipate that it will, that it could set a precedent for other states to adopt similar kinds of legislation," Menor said.

But media are not the only ones taking an interest.

After news spread Wednesday of the state's first published list of maximum wholesale gasoline prices, one Yahoo! discussion list generated 1,276 messages over the next two days.

So far, the reviews have been mixed.

Internet postings (the ones suitable for printing) carry subject headings that include "It won't work for Hawaii," "Hawaii leads the way" and "This will create shortages."

"I saw some initial reaction from people saying, 'Well, why don't we do it?'" Felmy said yesterday. "Then you start to explain what some of the pluses and minuses are, and they start to say, 'Well, maybe we'll wait to see what happens in Hawaii.'"

The law, which takes effect Thursday, allows the state to set a weekly maximum price for wholesale gas based on an average of prices in Los Angeles, New York and the U.S. Gulf Coast.

Initial calculations show prices could rise slightly above current levels.

"I think (people) are all sitting around going, 'Well that was lame,'" Brewbaker said.

But lawmakers who passed the legislation say they continue to support the law and that it should be given a chance to work.

Supporters say price caps will help keep Hawaii's prices -- historically among the highest in the nation -- more in line with changing market conditions elsewhere.

House Energy and Environmental Protection Chairwoman Hermina Morita (D, Hanalei- Kapaa) said criticism might appear to outnumber support because of the nature of the argument.

"It's difficult to explain about the competitive market and the price of crude oil and the different factors," she said. "It's very complex and people are price-sensitive, so it's really easy to shout out that there's going to be shortages and gas lines."

Gov. Linda Lingle, who opposes price caps, said Thursday she had not yet received any inquiries from other states about the law. "But I'm certain everyone is watching," she said. "I've seen quite a number of stories, and it's been a concern.

"It's not a positive from the point of view of a business person or someone who wants to invest, because you know they value certainty a lot, and this is so uncertain."

Opponents argue the caps will lead to higher prices and possibly shortages if suppliers cannot make enough money to stay in business because of the regulations.

Brewbaker said he also is concerned about what message the "gas cap" law is sending.

He recalled an infamous 1997 Forbes magazine article entitled "The People's Republic of Hawaii," which slammed the state's business climate for its high taxes and barriers to competition.

"If you thought for two seconds about how this would look outside the state, what this communicates about the business climate, about the nature of the market economy in Hawaii ... none of it's good," Brewbaker said. "It seems what's symbolic about this legislation and now its implementation is that it so resonates with that stereotype -- that Hawaii sort of goes out of its way to do strange things to its economy."