Gas cap’s influence
on prices unclear

Thirty-four states had more expensive gasoline than Hawaii yesterday, prompting backers of the nation's first-ever state gas cap to say their new law was keeping island prices low.

Critics of the bill, however, said Hawaii's prices were relatively cheap only because the state's gasoline infrastructure was unaffected by Hurricane Katrina.

Hawaii has routinely boasted some of the priciest gasoline in the country, but AAA said yesterday the average price of regular unleaded gasoline in the state stood at $3.01 a gallon, up 6 cents from $2.95 Sunday.

Maryland reported the most expensive gas in the country at $3.26 for a gallon of regular unleaded.

"For the first time in many years, if not decades, Hawaii's gas prices are tracking lower than other mainland locations," said House Majority Leader Marcus Oshiro (D, Wahiawa-Poamoho). "This indicates that Hawaii's fair gas price law is working."

The gas cap law, which went into effect Thursday, imposed a limit on what wholesalers can charge for their gas. It says local refineries cannot charge more than about 28 to 62 cents more per gallon of gas than the average wholesale price of three mainland markets.

The state allows wholesalers to charge more in the less populated neighbor islands.

The caps are designed to link Hawaii's prices to those on the mainland to ensure island drivers are charged fair prices.

Backers of the gas cap law allege the state's two refineries have long taken advantage of their dominant position in the state's small, remote market to charge unfairly high prices for gasoline.

It is difficult to assign credit for the latest price in Hawaii, however, since the gas cap went into effect Thursday as Hurricane Katrina drenched the Gulf Coast, disabling oil platforms, pipelines and refineries.

Jack Suyderhoud, a professor of business economics at the University of Hawaii, said the state's prices might even be cheaper without the cap since the law directly links prices here to mainland prices, which are surging.

"If the gas cap hadn't been in place, we might have been 40th rather than 35th," Suyderhoud said.

Most of Hawaii's gasoline is refined locally from oil brought to the islands from Asia and Alaska, and so was not directly affected by the hurricane.

Still, many drivers in the islands thought they were still paying too much for gas.

"Gas prices are already ridiculously high. It seems the gas stations are being greedy and not thinking of the people," said Glenda Sugi, of Honaunau on the Big Island. "We just have to shop around for the best prices."

In Honolulu, Scott Inouye was able to pay $2.89 a gallon at a gas station downtown.

"It's still cheap. We are not at the $3 mark yet," said Inouye, who was visiting Oahu from Hilo. He suspected gas prices would keep rising because of the cap.

"I think we'll feel it in a couple of weeks," he said.