Gas prices highest since October

Wholesale prices are set to go up 11 cents as the Senate considers suspending the cap law

Wholesale price caps on gasoline are expected to take another double-digit jump next week, while the debate over the future of the caps continued today in both the House and the Senate.

Price caps, which are set by the Public Utilities Commission every Wednesday, are forecast to increase by 11 cents next week, according to preliminary calculations by the Star-Bulletin.

This week's caps are 14 cents higher than a week ago and are at their highest points since October, when Hurricane Rita ravaged Gulf Coast oil facilities that were still recovering from Hurricane Katrina.

After reaching their lowest points of the year during the week of Feb. 20, the price caps have increased 53 cents a gallon since then.

By Monday, if wholesalers charge up to the maximum and dealers add a markup of 16 cents, prices for regular gasoline are expected to range from $3.19 a gallon on Oahu to $3.56 on Lanai, while the statewide average could go to $3.25.

Yesterday's statewide average was $2.99 a gallon for regular, 31 cents higher than the national average, according to AAA's Fuel Gauge Report.

The debate over the price caps continues today in the Legislature as lawmakers wrap up work in preparation for joint House-Senate conference committees.

House lawmakers want to suspend the caps and in their place enact oversight measures aimed at ensuring fair gasoline pricing by the oil companies in Hawaii.

The Senate is set to advance a bill that would suspend enforcement of the price caps but continue having the Public Utilities Commission calculate the price ceilings under a revised formula. The price caps would be put back in place for two weeks if wholesale prices rose above the hypothetical caps for two straight weeks.

Senate Consumer Protection Chairman Ron Menor, chief author of the gas cap law, offered the proposal as a compromise to House members who strongly opposed keeping the price caps in place.

House leaders have balked at his proposal but said they look forward to discussing it in conference. If no compromise is reached, the current law would remain in place.

One group of gas station dealers is urging lawmakers to defeat Menor's bill.

A group of 15 Union 76 dealers, mostly from Oahu, met yesterday and drafted letters to state lawmakers urging them to oppose the bill. Dealers say the on-and-off nature of the caps under the new proposal would cause severe hardship.

"Sen. Menor has proposed a tortuous regulatory process which creates even more volatility in the market than the painful market swings resulting from his existing gas cap," one of the group's letters states.

Menor said he's is sensitive to the concerns of the dealers, but added that he believes they have been misinformed about how the new proposal would work by their suppliers, who have opposed the cap in the past. He noted that the oil industry made predictions about supply shortages and other dire consequences that would occur under the price cap, but none of those ever materialized.

"This is merely a repeat performance of their initial misinformation," Menor said.

Hawaii's price caps are tied to an average of spot wholesale prices in the Gulf Coast, New York and Los Angeles.