Lawmakers vow to fund gas-price reporting law

Bills call for money to allow the PUC to require transparency from the oil industry

A year ago the issue of whether to save or scrap the state's unique gasoline price cap law caused a bitter fight between House and Senate lawmakers who worked up to the last minute of the session before striking a compromise.

The cap ultimately was suspended in favor of new reporting requirements for the oil industry and stricter antitrust laws.

Despite the demise of the "gas cap," pump prices continue to be an issue at the Legislature. Hawaii's gasoline remains the priciest in the country, with the state average topping out last week at $2.86 a gallon for self-serve regular, according to AAA's Fuel Gauge Report. Next highest was California at $2.72 a gallon, while the national average was $2.26.

This year, the House and Senate appear to be on the same page as they work toward full implementation of the price-reporting requirements for the players in the state's oil industry.

Measures remain alive in both chambers to provide funding for the Public Utilities Commission to carry out the transparency requirements set forth in last year's bill. Although the Legislature sought more information from the oil companies, lawmakers provided only $1 to the PUC last year for collection and analysis of the data.

"There's no question the Legislature recognizes that it's important to provide the PUC with adequate funding to implement the transparency provisions," said Senate Energy Chairman Ron Menor (D, Mililani). "It really is in the interests of consumers for that kind of legislation to pass.

"I'm very confident that transparency legislation will pass this session."

Other measures that remain alive include proposals to provide tax credits or exemptions for ethanol-blended gasoline, and a bill aimed at preventing price gouging during emergency situations.

For the transparency proposals, House and Senate bills originally called for $500,000 and $300,000, respectively, while the Lingle administration asked for $1.2 million.

Although the final amount will be determined as lawmakers hammer out the biennial budget, House Majority Leader Kirk Caldwell (D, Manoa) said he is inclined to give the administration the full amount requested.

"One game that could be played by the executive branch is, 'You didn't give all the money I requested, and I can't do everything you want as a result,'" Caldwell said. "I say let's give everything that's needed so that we can get going and move forward on this."

The goal of transparency is to get consumers information about how Hawaii oil companies arrive at the price for gasoline. Consumers could then determine if they feel oil companies are pricing unfairly and bring pressure on the governor to reinstate price controls in some form.

Critics of oil companies contend the state's two refiners, Chevron Hawaii Corp. and Tesoro Corp., have kept prices artificially high in a tightly controlled market to maximize profits. Oil companies argue that Hawaii's isolation and high taxes keep prices up, while an anti-business climate prevents others from entering the market and fostering competition.

Oil companies argue that much of their pricing information is confidential for competitive reasons and that making it public would be damaging.

Bruce Smith, president and chief executive of Texas-based Tesoro, said it would be no different from asking an employee to disclose assets such as how much is in a retirement plan.

"It's a really difficult issue because it sort of feeds this sense that there's something going on," Smith recently told the Star-Bulletin. "I think it's as simple as if we asked most people, 'Would you disclose this?' They'd say, 'No, I don't want to do that.'"

Melissa Pavlicek, an oil industry lobbyist representing the Western States Petroleum Association, said the industry already complies with a number of transparency requirements.

"We support transparency. We already comply with a lot of transparency," Pavlicek said. "We're just concerned about the disclosure of the proprietary company information to the competitors."

Smith and Lynn Westfall, Tesoro's chief economist, add that the amount of data that goes into pricing gasoline is so extensive that consumers would likely have too much information and not be able to do anything with it.

"Asking that question means you view our business as a cost-plus, like building an aircraft: We add up all of our costs, add on a 15 percent return on our money and that's how it's priced out. That's not how it works," Westfall said. "The price is set by supply and demand. It doesn't do us any good to look at the cost of making gasoline because what would it tell you?

"You're trying to come up with, What should be the price of gasoline?" Westfall added. "I could fill a supercomputer with data, and you can't figure out what it should be."