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Hawaii gas prices
reflect U.S. market

THE ISSUE Senate Inouye has joined other senators and state officials in calling for investigations of gasoline price gouging.

ALARM, lack of information and, as a result, rumors contributed to the steep increase in gasoline prices in the days following Hurricane Katrina. Numerous states launched investigations into price gouging, and Senator Inouye joined in calling for a federal probe. However, most exorbitant pricing probably was isolated, resulting from initial overreaction by some gasoline dealers before market forces on the mainland stabilized prices somewhat and are expected to bring prices down.

Although immune from those market forces, oil companies serving Hawaii took advantage of higher prices on the mainland by raising prices to the state's newly implemented wholesale gasoline price ceiling. Gasoline supply here was not directly affected by Katrina, which reduced oil production in the Gulf of Mexico by 90 percent, because Hawaii gets its oil from Asia and Alaska.

The U.S. Department of Energy forecasts that gasoline prices at the pump will fall to $2.60 by year's end and average $2.40 next year. That should force down Hawaii's prices to sensible levels.

Florida's attorney general was the first to file charges of price gouging against a small gas station that raised prices as much as 80 cents, although it had received no extra shipments of gasoline at higher costs.

The price of crude oil surged past $70 a barrel the day after Katrina pummeled the Gulf Coast but fell to about $66 a barrel by this week's end, translating to $1.52 per gallon of gasoline. Retail prices include the price of oil, transportation and refining costs, dealers' operating costs and profit margins, a competitive factor for Hawaii dealers but not for the oil companies.

Oil futures fell after the Bush administration said it would start making loans from the Strategic Petroleum Reserve, the government's 700-million-barrel stockpile, and the 26-nation International Energy Agency said it would release 60 million barrels at the rate of 2 million barrels a day. Hawaii's gas cap should continue to reflect mainland market forces.

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SBA terrorism loans
warrant investigation

THE ISSUE A Senate committee has launched an investigation into abuse of government loans from a terrorism relief fund.

MANY companies far away from the Twin Towers and the Pentagon were hurt by the 9/11 attacks and were rescued by federal loans, but a congressional investigation into alleged abuses is warranted. Included in the $5 billion in low-interest, government-guaranteed loans was $6.1 million lent to 59 small businesses in Hawaii, some unaware that it came from a special terrorism relief fund.

Research by the Associated Press uncovered what Sen. Olympia Snowe, R-Maine, calls "apparent widespread abuse of loans provided through the Supplemental Terrorist Activity Relief Act." Snowe says the Senate Small Business and Entrepreneurship Committee, which she heads, will investigate possible abuse by the Small Business Administration, which administered the loan program.

The AP reported that businesses ranging from Dunkin' Donuts to motorcycle dealers across the country received loans under the program. Several business owners said they had not been hurt by the terrorist attack and were embarrassed to learn that their loans came from the program.

The largest loan to a Hawaii business was $1 million to Waterway Corp., also known as Club Lahaina, which uses three vessels to transport passengers to and from cruise ships anchored near Maui. Eight months after the terrorist attack, Waterway bought a 65-foot high-speed catamaran from Louisiana-based Geo Shipyard Inc. to replace a 30-year-old boat, which was put up for sale, according to a shipyard press release.

A thorough investigation is needed to determine the extent of what Sen. John Kerry, D-Mass., calls "White House budget gimmicks that left SBA's largest loan program underfunded and on the brink of shutting down."

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