HONOLULU -- The Hawaii Legislature ended an eight-month-old experiment in gasoline price reduction, indefinitely suspending the states controversial gasoline cap, reported the Honolulu Star Bulletin.
Legislators said their constituents told them the cap was not lowering the price of gasoline, and with an election in November and gasoline prices rising, they did not want to be blamed for the increases.
"The people out there didn't believe it was doing what it was supposed to do," State Senate Vice President Donna Kim said after [image-nocss] the session ended. "Part of it was because of the complicated formula, and part the PUC (Public Utilities Commission). So many people were confused, and nobody knew if it was working or not," Kim (D) said, according to the report.
In the House, State Representative Hermina Morita (D), an early supporter of the cap, gave up the fight. "At this time there is no political or public will to have the gas cap continue," he said in a floor speech.
Under the new bill, the law reportedly would be kept on the books on standby for use if Governor Linda Lingle (R) decides it should be brought back. The legislation awaits her signature.
Republicans have opposed the measure since its inception in 2001, said the report, but it was not until the price controls went into effect last August that they have been able to claim political victory. "The gas cap has been in effect since last summer, and as predicted it has failed. It's not surprising because history shows and history tells us that price caps never work, never have worked, never will work," State Rep. Mark Moses (R) said.
Hawaii imposed weekly limits on wholesale gasoline prices based on the average of prices in Los Angeles, New York and the Gulf Coast, added an Associated Press report. Then allowances were added for what it costs wholesalers to ship to Hawaii and distribute gasoline to more remote islands. Price caps differed for each island. There was no cap on the markup added by gas stations.
Some opponents argued that the state's limit on gasoline prices actually helped the oil companies boost profits because they knew they could charge up to the maximum allowed. Another problem was that it was hard to tell whether the law did any good. Because the oil refiners keep their profit margins and costs private, it was difficult for even experts to determine whether residents were paying more or less than they would without the cap.
One study by an economics professor showed the cap cost consumers five cents more per gallon. An analysis by the state Department of Business, Economic Development & Tourism estimated that island motorists paid $54.9 million more than they otherwise would have in the first five months under the cap. But research by cap supporter State Rep. Marcus Oshiro (D) indicated the limits saved drivers $33 million.
"It was a failure, and other experts that have looked at it have said the same thing," said Anita Mangels, a spokesperson for the Western States Petroleum Association. "It was well-intended, but apparently according to the state's own agency has not served consumers well."
"Going into an election year, they weren't willing to support gas pricing regulations, given the concerns of many people in the public, and I think the oil companies did a good job of blaming the pricing regulations for the high prices," said State Sen. Ron Menor (D), chief advocate of the cap.
At the same time, the law provides for computation of a hypothetical gasoline cap using a new formula expected to be about 16 cents a gallon lower than the current one. The revised calculation will include prices from low-cost Singapore, and it will disqualify the highest-priced market from the average of the four regions.
"It will remain as a flashing sign that will remind Hawaii's consumers what the price would have been under the gas cap," said Scott Foster, a spokesperson for Hawaii Advocates for Consumer Rights. "The more information we get, the more we can understand about how the industry has been gouging us."
Other parts of the law lifting the controls require the oil companies to make their wholesale pricing information public so that customers could compare pump prices with actual costs. Currently, that information is kept confidential by the companies.
"We understand that people desire to know what the situation is," said Albert Chee, a spokesman for Chevron. "No one can claim exactly what the effect has been. I don't know if following of mainland prices has better served our customers."
Meanwhile, the state legislature did raise the tax on cigarettes, starting next year, with a 20-cent-a-pack increase for each of six years. The extra money will go to help support the University of Hawaii medical school, community health centers and emergency health services, the report said.
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