Gas cap demise will require use of other methods

THE ISSUE Legislative conferees have agreed on a bill to suspend the state's gasoline price cap.

MOTORISTS' frustration with rising gasoline prices has prompted state legislators to shelve what they see as the ineffectiveness of Hawaii's price caps, but prices are sure to continue increasing. The question is whether they will rise faster than they would with the caps, and the bill destined for enactment would keep them in place as hypothetical limits. Next year's Legislature should have the information needed in deciding whether to reinstate them.

Gas prices have soared in recent weeks because the caps were based on prices on the mainland, which are nearing $3 a gallon. Energy Secretary Samuel Bodman attributes the rising prices to growing demand for oil worldwide by China, India and other emerging economies. Of course, some of the supply has been disrupted by the strife in Iraq.

The Hawaii caps were created because of the absence of normal market factors in the state's oil oligopoly. The bill approved by House and Senate conferees provides that oil companies supply more information about their pricing formulas. That should tell whether the companies are engaged in price gouging.

U.S. Senate Majority Leader Bill Frist has proposed $100 rebates to many Americans because of the gas prices, while some Senate Democrats are suggesting a temporary suspension of the 18.4-cents-a-gallon federal gas tax. Both proposals are ludicrous pandering.

Gasoline taxes in the United States are modest. In Hawaii, city, state and federal taxes at the current rate are less than 50 cents a gallon, compared to taxes accounting for more than half the average price of more than $6 a gallon in Europe. The only effect that tax rebates or lowering U.S. taxes might have would be to temporarily drive up demand.

Josh Bolten, President Bush's new chief of staff, correctly said the problem has built up over decades. "It's not going to be solved in the short run by some silver bullet," he said.

Bush has proposed suspending environmental safeguards and raising fuel efficiency standards for cars, which have averaged 27.5 miles per gallon for two decades. High gas prices have led to a decline in sales of sport utility vehicles in the past three years, while hybrid gasoline-and-electric cars are the new rage.

Government at all levels should work on reducing consumption and thus demand. Hawaii has taken positive steps in requiring most gasoline to contain 10 percent ethanol and in approving the goal of rapid transit on Oahu.

TheBus passenger trips increased from 61.3 million in 2004 to 62.9 million last year and should continue rising as gas prices increase. The city's Vanpool Hawaii also could attract more passengers wanting to save money by paying $55 a month for its service, compared, for example, with more than $200 in gas prices commuting in a car to average fuel efficiency from Kapolei to downtown.